Committee Reports > List of Committees > Dáil > 1941 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1939 - 1940

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 5adh Meitheamh, 1941.

Thursday, 5th June, 1941.

The Committee sat at 11 a.m.

DEPUTY DILLON in the chair.

Mr. Maher (Roinn an Ard-Reachtaire Cunntas agus Ciste), Mr. G. P. S. Hogan and Mr. L. M. Fitzgerald (Roinn Airgeadais) called and examined.

VOTE 52—AGRICULTURE.

Mr. D. Twomey, called and examined.

Chairman.—There are several notes to this Vote by the Comptroller and Auditor-General. The first note is:—

Subhead G 3—Fertilisers Scheme.

“28. The scheme whereby farmers were enabled to obtain certain artificial fertilisers at reduced prices was reintroduced in the season 1939-40. As in the previous season, it was arranged that the members of the Irish Fertiliser Manufacturers’ Association should allow rebates on the current prices charged to retail merchants and co-operative societies, that the reduction should be passed on by the retailers to their customers, and that the rebates allowed should be recouped to the manufacturers on submission of certified statements of sales and auditor’s certificates.

A rebate at the rate of 10/- per ton was allowed on superphosphate (35 per cent.), potassic superphosphate, and compound and complete fertilisers supplied by the manufacturers during the period 20th October, 1939, to 13th July, 1940, inclusive. The expenditure during the year totalled £86,790 4s. 4d., of which £39,123 2s. 6d. related to the 1939-40 season, and £47,667 1s 10d. to the previous season. The total amount due to the manufacturers in respect of rebates allowed during the 1939-40 season was £76,394 5s. 9d., of which £37,271 3s. 3d. was recouped during the financial year 1940-41.”

The next paragraph is:—

Subhead H—Grants to County Committees of Agriculture.

“29. The charge to this subhead includes normal grant amounting in the aggregate to £91,900, special temporary grant totalling £6,000, and payments amounting to £14,532 16s. 3d. for the purpose of supplementing committee’s expenditure on the provision of lime for agricultural purposes. The normal grant of £91,900 comprises a sum of £73,132, equivalent to the proceeds of the agricultural rate of 2d. in the £ under the Agriculture Act, 1931, and extra grants, amounting to £18,768, equivalent to the amount of the income of committees from rates in excess of the statutory minimum 2d. rate. In addition to the foregoing, a sum of £371 was paid to one county committee from funds derived from penalties imposed under the Corn Production Act, 1917.”

677. What was the nature of these penalties?

Mr. Twomey.—They are penalties collected under the former compulsory tillage scheme for not complying with the compulsory tillage order. They have been kept to the credit of the counties concerned ever since, but they are being gradually disbursed and there is very little money on hands now. This particular sum was paid to the South Tipperary County Committee of Agriculture to enable them to establish cider orchards in the area with a view to supplying the cider factory in Clonmel with proper cider apples.

678. Chairman.—Is it at the discretion of the Minister for Agriculture that these sums are disbursed, from time to time, to the county committees of agriculture?—Yes.

679. Deputy McMenamin.—They are paid to the counties from which they were collected originally?—Broadly speaking, they are disbursed in the district in which they were collected, though not actually in the same county. We gave grants to a school in Meath and these grants included some moneys derived from Kildare as well as Meath. So long as the money is disbursed for the benefit of the district generally, it meets the requirements of the Act.

680. That does not imply that it is the district from which it was originally collected?—Not necessarily. It need not be confined precisely to the county from which it was collected.

681. Chairman.—The next paragraph is:—

Subhead K 4—Grant in respect of the Development of the Manufacture of Milk Powder.

“30. The expenditure under this heading relates to the payment to a co-operative creamery of subsidy, at the rate of 6d. per lb. tin and 3d. per lb. carton, on sales in this country of certain milk foods manufactured in the United Kingdom from milk powder produced by the creamery.”

Why did they get it manufactured in the United Kingdom?—Because there were certain secret processes through which the milk was put and it was felt that there was a better opportunity of absorbing our own milk and milk powder by getting it placed on the market through the medium of a product already well known. It was thought that, for a beginning at all events, that was the best course to adopt.

682. So far as my experience goes, this scheme is one of the very best instituted because the product is excellent and the price moderate. It was in order to allow the secret processes to operate that it was decided to get the work done in the United Kingdom?—Yes.

683. Chairman.—The next paragraph is:—

Subhead M 5—Improvement of the Creamery Industry.

“31. Including the expenditure of £9,331 11s. 4d. in the current year, the total Vote expenditure to 31st March, 1940, from moneys provided for the improvement of the creamery industry amounts to £1,171,428 1s. 3d. Receipts amount to £222,116 16s. 7d., leaving a net charge on public funds of £949,311 4s. 8d.”

Of course, there are substantial assets in the hands of the Government which can be set off against that sum of £949,311 4s. 8d.?—Yes, and there are instalments still due on creameries sold, amounting to over £30,000. In addition, the State holds a number of central creameries and separating stations, a central condensory and three subcondensories.

684. You sent us a return up to 31st March, 1940, dealing with this matter?—Yes.

Chairman.—Do the members wish this return to be incorporated in the Minutes of Evidence?*

Agreed.

685. Chairman.—There is a note by the Comptroller and Auditor-General:—

Subhead M 7—Expenses in connection with the provision of Butter for Winter requirements, etc.

“32. In paragraph 35 of my last report I mentioned that allowances were payable on creamery butter and certain other dairy products produced during the period 1st May to 30th November, 1938, and on creamery butter produced during the period 1st to 9th December, 1938. Payments in respect of the balance of these allowances, totalling £5,218 0s. 2d. are charged in this account.

Allowances payable on the production during the 1939-40 season, of creamery butter and other dairy products amounted to £264,858 12s. 4d., viz.:—

The balance of the charge to this subhead, £1,227 19s. 3d., relates to payments made in respect of the acquisition and cold storage of non-creamery butter.

I am in communication with the Accounting Officer regarding the allowances paid on the production of cheese, condensed whole milk, and full cream milk powder.”

Have you anything further to say, Mr. Maher, in connection with your correspondence regarding the allowances paid on the production of cheese, condensed whole milk, and full cream milk powder?

Mr. Maher.—Our inquiries related mainly to the allowances for cheese and for whole milk used in condensing. We noticed that overpayment in respect of cheese produced had been made to some creameries but the Accounting Officer has recently informed us that this overpayment of £1,429 has been recovered. The payments were due to the increased prices obtained by the creameries on the export market. As a result, the allowances paid were excessive. In the case of the allowances on whole milk used in condensing we notice that one creamery was paid in excess of its claim, which was based on the weight of the milk used, but the Accounting Officer has informed us that the allowances were paid on a gallonage basis instead of on a weight basis. This creamery was paid £2,231, but had claimed only £1,950. As regards our query relating to full cream milk powder, that might be deferred until we come to paragraph 89—Export Subsidies.

686. Chairman.—Can you give us any further information in respect of the over-payments for cheese and condensed whole milk, Mr. Twomey?—The allowance in respect of cheese was intended to run over the whole year. In fact, the price obtained by our exporting creameries towards the end of the season was much better than anticipated, to such an extent that it raised the average price obtained by them for cheese over the whole year to a higher figure than anticipated. We got a recoupment from the creameries, which brought their net return for cheese back to what was arranged, to make it in accordance with the price obtained for milk used for the manufacture of butter.

687. Chairman.—Was the subsidy actually paid before the average price for exported cheese for the whole year had been ascertained?—It was.

688. Is that usual?—It is. We fix in relation to the price being paid for milk used for the manufacture of butter, average prices for cheese and arrange that we will bring the price up to that for the creameries regardless of what they may sell the cheese for in the export market. We make these payments during the year. In this particular case, because of the outbreak of war, contrary to anticipations the price obtained was very much better than the New Zealand price which was the datum line on which we were working. That was the agreement with the creameries, that we would pay them a price for milk used for cheese in relation to the price being obtained for New Zealand cheese. In fact, because of the war conditions the price obtained by the creameries was very much higher than the New Zealand price and retrospective adjustments had to be made. As a result of that, we got recoupment from the creameries.

689. I take it that it is for the convenience of the creameries you make these bounty payments at intervals during the year instead of waiting until the end?— Yes. They have to pay their milk suppliers and must be kept in funds.

690. In regard to the condensed whole milk payment which was in excess of the claim by the creamery, was this simply some misunderstanding by the creamery of its rights under the bounty scheme?—There is a number of concerns in this country making condensed milk in one form or another—for example, some concerns are condensing milk for chocolate manufacture. For that purpose the cocoa and sugar must be added before the final condensing takes place. Then, in the manufacture of sweetened condensed milk, sugar must be added. There is only one form of condensed milk—that is, the simple evaporated condensed milk—where nothing is added. If all the milk were converted into simple evaporated condensed milk the problem would be a simple one, as you could determine the quantity of raw milk that would be required to make one cwt. But in cases where cocoa and sugar in one case, and sugar only in another case, are added, it is difficult to determine how much raw milk may have entered into the making of one cwt. of the product. We have felt that the fairest basis is the raw milk which is used in the manufacture of the products. We went on the gallonage of the milk and applied that gallonage to the concerns making the chocolate and the sweetened condensed milk and we thought it the fairest basis of all. On that basis, one firm was entitled to more than they actually claimed on the quantity of finished product which they made, that is, on the weight of the finished product. But we thought it better to pay the bounty on the same basis on the gallonage of raw milk used.

691. Chairman.—I take it that that meets the subject matter of your query, Mr. Maher?

Mr. Maher.—That is so. We were concerned with the difference between the claim and the payments and thought it necessary to bring it to your notice.

692. Chairman.—In fact, Mr. Twomey, it might be put shortly that the purpose was to secure uniformity between all the creameries?—Yes, for all the concerns making condensed milk in different forms.

693. Chairman.—There is a note by the Comptroller and Auditor-General:—

Subhead M 8—Importation of Seed Wheat.

“33. With a view to the provision of an adequate supply of seed wheat for spring sowing requirements, arrangements were made with two importers, in January, 1939, for the importation of approximately 25,000 barrels of Swedish wheat under a guarantee against loss in the disposal of any unsold stocks. At the close of the sowing season 7,280 barrels of seed remained unsold and it was decided that this quantity should be purchased from the importers and retained for seed purposes until the spring of 1940. By August, 1939, it was found that the germination had fallen below the required standard and the wheat was, accordingly, sold for milling.

The expenditure on the purchase, carriage and storage of the seed amounted to £12,412 16s. 10d. while a sum of £11,516 14s. 6d. was realised on sale and is included in the Appropriations in Aid. The loss incurred in connection with the guarantee amounted, therefore, to £896 2s. 4d.”

Have you any means, Mr. Twomey, of ascertaining the profit made by the importer on the 18,000 barrels of Swedish wheat which he succeeded in disposing of in the ordinary course of trade?—We fixed the sale price by agreement with them.

694. Approximately what profit did they make on the sale of the 18,000 barrels in the course of trade?—It was a reasonable trade margin of profit, but I could not say just now what it was. We went into it and as we fixed the selling price we knew that the margin of profit would be reasonable.

695. Deputy Hughes.—Why did you confine it to two importers?—It was convenient to get the two largest importers in the country to handle it.

696. Deputy Hughes.—On the other hand, it eliminated the element of competition which could have been there to protect the purchaser if you had issued licences to more than two?—In view of the fact that we fixed the sale price, I do not think it made much difference.

697. The seed wheat could have been bought more cheaply, and was quoted more cheaply to other people who were prepared to import?—At that particular time?

Deputy Hughes.—Yes. I have several complaints that that was so, and I have seen quotations with merchants.

698. Chairman.—Does it occur to you that it seems odd that the Exchequer should bear the entire loss of the decline in germination of the wheat, while two traders concerned should collect all the profit on the sale of the 18,000 barrels which they, in fact, succeeded in negotiating?—In that winter we were faced with a problem of ensuring that there would be available adequate seed for spring sowing when the time would come, and that there would not be any shortage of seed for anyone who wished to sow spring seed wheat. We made the best bargain we could with the importing firms—that they would import seed and sell it on a certain margin of profit, and that any wheat left over would be our responsibility. It would be impossible for us to have got sufficient seed into the country at the time under any other conditions. If we had left it to the ordinary trade without any guarantee, small quantities would be brought in by a big number of traders, possibly, but we would not be sure that when it came to March we would have adequate supplies.

699. Had you considered the possibility of bringing it in yourselves to one of the warehousing companies in the country and inviting traders throughout the country to apply to the Department of Agriculture for this seed wheat at a fixed price?—We thought it better to do it through trade channels rather than enter into trade ourselves.

700. I would be satisfied with that if the trade channels would take the ordinary risks. To most of us traders, if we buy seed wheat we make our profit, and if there is a loss on any remaining on our hands we meet that out of the profit that we have made on what we have sold. That is the ordinary trade risk?— Yes, normally the trader would buy prudently and cautiously and buy no more than he will be sure to sell; but in this particular case in order to ensure that there would be enough, we had deliberately to bring into the country more than might be required. It would be unfair, I think, to ask traders to take the responsibility and bear the losses in bringing in deliberately more than would be required.

701. In view of the fact that these firms have received substantial protection in the form of the protection given to seed cleaning operations in recent years, do you not think that it would be reasonable to say to them: “Bring in your wheat, sell it, and, if you make a loss on the total transaction, the Exchequer will indemnify you.” Here it seems to me that these firms made a substantial profit on 18,000 barrels they sold, against which they might very reasonably have set off the loss on the 7,280 unsold, leaving them a modest margin of profit. They have taken the entire profit and borne no share of the losses?—The margin we allowed was no more than an ordinary fair trade margin for the seed sold and I think that they were entitled to that margin for the actual handling of that quantity.

702. It was, I take it, more than a commission; it was the ordinary trade margin of profit?—Of course, every seedsman, Mr. Twomey, would fix his ordinary trade margin of profit on the assumption that there might be some miscarriage which would produce a loss on part of the consignment and the trade margin would be fixed so that, setting one against the other, you would be left with a reasonable net profit at the end of the year?— Yes, but then he would buy cautiously and he would not buy the excessive amount we wanted to make sure would be in the country.

703. Deputy Hughes.—I think I am right in stating that the price charged was not a competitive price and in fact an importer buying such a quantity, 25,000 barrels, should have got it at a very keen price, placing an order of that magnitude?—As regards the buying price, I think they bought at the very lowest price at which it could have been bought by anybody at the time.

704. And you are satified that the profit was not unreasonable?—We are satisfied that the margin was a fair trading margin that did not give them more than any trader should have for handling the wheat actually handled and sold.

706. Did those two importers carry the surplus until it was disposed of to the mill?—Yes.

707. Chairman.—I think in fact, you took it over at the end and stored it yourself in the Merchants’ Warehousing Company?—We did, yes.

708. Deputy Hughes.—If the wheat was in the proper condition in the first instance and stored under proper conditions, why did the germination go off?— I do not know why the germination went off considerably during the summer months.

It appears to me that there was some neglect about it. We all know that if it is properly stored and handled, and there is sufficient attention given to it, airing and that sort of thing, it would not fall.

709. Chairman.—In fact, the wheat was turned four times, was it not, at an expense of £90?—Yes. I think the wheat got reasonably good care, and I do not think it was anybody’s fault in particular that the germination went off. I think it was something inherent in the grain itself.

710. Deputy O’Rourke.—Could it have been older wheat than you thought it was?—The germination was alright in spring time.

711. It may have been mixed with previous year’s wheat?—Yes.

712. Deputy Allen.—What variety of wheat was it?—Diamante wheat.

713. Is it not a fact that with Diamante wheat germination falls very fast?—I have heard that said. I have no definite proof of it. It is supposed to go off quicker than other varieties.

714. Even in spring months we have heard of germination falling very quickly?—In wheat you are dealing with maked grain. It is different with oats and barley, which have a protective hull. Any slightly adverse conditions would affect wheat that would not in fact affect oats or barley.

715. Deputy Hughes.—You must have adverse conditions before it is affected?— They may be slightly adverse, but, as far as we knew, there were no adverse conditions; the wheat was stored reasonably well and got reasonable care.

716. Chairman.—And having considered the matter fully, you take the view that although these persons made a trading profit on the 18,000 barrels sold by them, it was not unreasonable that the Exchequer should bear the entire loss on that part of the wheat which had subsequently to be sold for milling purposes?— We are satified that their margin was not such as would enable them to carry a loss on the unsold wheat.

717. Could you conveniently let us have a note* setting out the margin of profit allowed on this transaction so that the Committee may consider how equitable it was for the Exchequer to bear the entire loss?—Yes; I will look up the records, and will be able to let you have that.

718. Deputy McMenamin.—Do you deal in large quantities of agricultural produce other than seed wheat?

Chairman.—Do you mean. Deputy, does Mr. Twomey arrange with the importers to bring in any other large quantities?

Deputy McMenamin.—Yes.

719. Chairman.—Is there, Mr. Twomey, any analogous arrangement to this in respect of any other agricultural product, for importing large quantities under this type of guarantee?—I do not think there is. I cannot call to my mind any other.

720. Deputy McMenamin.—In connection with this consignment, when entering into this contract did you consider importing it yourself and the cost of storing it and distributing it as against the importers doing it?—You see, we would not have staff and machinery and facilities for handling wheat and storing it, and all that.

721. Had these importers storage?— They had.

722. It did not belong to the Port and Docks Board?—No. The storage we used eventually, from the close of spring until autumn, belonged to the Merchants’ Warehousing Company but these people at the time they imported had storage themselves.

723. Did you calculate, against the price paid here to these people, what would be the cost assuming you did it yourselves directly?—We did not consider dealing with it directly. We never went into what it would cost us to employ staff, hire storage and so on.

724. Chairman.—Nor did you advert to the possibility of asking Messrs. Grain Importers Limited to carry out the transaction on behalf of the Government?—No, we did not.

725. Deputy Allen.—They were hardly in existence at that time?—At that time they were not there.

726. Chairman.—They were not functioning?—No.

727. I think they must have been because in your report for the year 1939-40, the 9th annual report, you refer, at page 147, to a scheme whereunder you got Grain Importers (Eire) Limited to bring in suitable seed oats from Canada. Perhaps it had only just been established at the time?—Yes, I think possibly it may not have been there when the wheat was being dealt with.

728. And was established just immediately after?—Yes.

729. Deputy McMenamin.—It was in April you brought in seed oats?—Yes, and we were making this arrangement about the seed wheat just after Christmas, in January. In fact, we had it under discussion at the end of the previous year.

730. Chairman.—In regard to

Subhead P—Appropriations in Aid, Repayments of Sums advanced to Seed Merchants.

“34. Repayments of advances to seed merchants under the scheme of credit for seed wheat, referred to in previous reports, amounted during the year under review to £119 4s. 6d. The balance outstanding at 31st March, 1940, was £247 5s. 1d.”

Has that account been closed yet, Mr. Twomey?—No; we are still getting some moneys in. There is a sum of about £150 due at present, and we are still collecting.

731. Has that scheme come to an end, or is it still operating?—It came to an end in, I think, 1936, and these are arrears that are being collected.

732. When do you expect to have that account closed?—All the claims are with the Chief State Solicitor at the moment with a view to getting them collected.

733. Deputy Hughes.—Was this scheme availed of to any great extent?—It was. to a very considerable extent. The sums advanced amounted to £20,668 altogether.

734. Chairman.—You only have £150 to collect?—£150 to collect.

735. That is a very good return, is it not?—Yes.

736. Chairman.—No sums have been written off as irrecoverable in the meantime?—£23 12s. has been written off as irrecoverable.

Chairman.—On the whole that is a very satisfactory return.

Deputy Cole—It is very satisfactory.

737. Deputy Hughes.—Is there an interest charge on that?—Yes.

738. Deputy McMenamin.—You said that a number of these small accounts are sent to the Chief State Solicitor for collection?—Yes.

739. I notice in the country in regard to cases of small balances like 7/-, 8/-, and 10/-, the sheriff is put in to execute. Of course, that is fulfilling the law all right, but it seems a very unprofitable thing, spending the citizens’ money to an amount of 30/- or 35/-, or £2, the cost of seizure for 6/- or 7/-. I know it is a problem, but it seems a very unprofitable procedure?—Generally when we get down to a small sum like that we have no difficulty in getting the man to make a final payment. We do not refer very small sums of that kind.

740. Does this thing pass out of your hands entirely, or is your opinion asked on it with regard to putting in the sheriff to recover a small sum under £1?—It has passed out of our hands once it goes to the Chief State Solicitor.

Deputy McMenamin.—That is what I thought.

Chairman.—

Levy under the Slaughter of Cattle and Sheep Acts, 1934 to 1936.

“35. As stated in previous reports, the provisions of the Slaughter of Cattle and Sheep Acts relating to the collection of levy in respect of cattle and sheep slaughtered for human consumption ceased to be in force as from 1st August, 1936. The amount collected in the year in respect of levy due but uncollected at the date mentioned was £4,437 6s. 1d., and the amount of levy outstanding at 31st March, 1940, was £24,752 4s. 3d. As noted in the account, sums totalling £6,534 11s. 3d. were written off with the sanction of the Minister for Finance.”

741. Deputy Hughes.—Why were the sums mentioned written off?—They were written off as irrecoverable, because in some cases the person had died, and in other cases they had no means, and, for one reason or other, it was ascertained they were irrecoverable.

742. Some of them ran for a long period without paying the levy?—Yes.

743. That is how it accumulated?—Yes.

744. Chairman.—Is any progress being made with the collection of this £24,752 5s. 3d. outstanding at the 1st March, 1940?—Yes, it is down to about £15,000 now.

745. Chairman.—

Receipts from Licences for the Export of Pigs and Bacon.

“36. The Emergency Powers (Export of Pigs and Bacon) Order, 1939 (Statutory Rules and Orders, No. 281 of 1939), which came into operation on 11th October, 1939, prohibited the export of live pigs and bacon, except under licence issued by the Pigs and Bacon Export Committee established for the purposes of the Order. In accordance with the terms of Section 8 of the Emergency Powers Act, 1939 (No. 28 of 1939), the Minister for Finance sanctioned the charging of licence fees at the rate of 2d. per cwt. of bacon, and 2d. per live pig exported, and directed that the proceeds should be credited to Appropriations in Aid. As will be seen from the account, sums totalling £701 7s. 6d. were collected from licensees.”

This 2d. per cwt. of bacon and 2d. per live pig was more or less to pay the expenses of the Pigs and Bacon Export Committee, was it not?—Yes.

Purchase of Co-operative Creameries.

“37. In the course of my audit I observed that two sums totalling £9,334 10s. 7d. were advanced to the solicitor of the Dairy Disposal Company, Limited, to enable him to complete the purchase from the liquidators of the fixed assets and goodwill of a co-operative agricultural and dairy society and of a co-operative creamery and that the expenditure was charged to a suspense account in March, 1940. I noticed that in one case, in which the advance amounted to £6,000, the purchase was not closed until June, 1940. In the other case it appeared that difficulties arose in connection with the title to the property concerned and application was made in November, 1940, for a refund of the sum of £3,334 10s. 7d. advanced. I have since been informed that the advances were made on the assumption that the purchase preliminaries had reached a stage at which payment would have to be made without delay and that the amount of £3,334 10s. 7d. has been refunded, together with £25 6s. 9d. bank interest which had accrued thereon.”

746. Chairman.—Have you any further comment to make on that, Mr. Maher?

Mr. Maher.—The money in this case appears to have been issued before it was actually required. That is a matter with which the Audit Office is very much concerned having regard to the rate of interest which the Government is called upon to pay for money, whereas the actual interest received on this sum while on deposit in the bank was only about one per cent. on the sum outstanding.

747. Chairman.—Can you, Mr. Twomey, give us any further information as to why that loss occurred?—We were informed that the money would be required at a very early date in order to complete these transactions. It is usual to issue money to the solicitor when he says he is in a position to complete the transaction; but some unforeseen difficulties arose in this case at the last moment which made it impossible to complete the transactions at that time. Both have since been completed.

748. Chairman.—Have you made any estimate, Mr. Maher, of the loss that accrued to the Exchequer as a result of the difference in interest charged on the money and the interest the bank allowed in respect of the money?

Mr. Maher.—I do not think it would be possible for us to do so. The main principle with which we are concerned is the issue of money by a Department before it is actually required. In this case I do not think the loss would be very much.

749. Chairman.—I suppose the difficuty here was that the money had to be deposited before the sale was completed. Therefore it was difficult to get positive evidence that the money was, in fact, required?—It is very difficult to fix the precise day on which the money would be actually required for payment by the solicitor. When we learned from the Dairy Disposal Company and the solicitor concerned that everything was in order, that the sale would be completed at an early date and that the money would be required to carry it through, we made the advance but as things transpired afterwards a difficulty with regard to the title, which was not foreseen, arose.

750. Deputy McMenamin.—Would the solicitor not know from the answers to the requisition on title that there was some difficulty in connection with the title? Would he not know when he got the answers to the requisition on title that the sale could not be completed for some time?

751. Deputy Cole.—Was it the State Solicitor was concerned?—No, the solicitor to the Dairy Disposal Company.

752. Would there not be an understanding that he would not cash the cheque until he was ready to complete the sale? —I presume he lodged the cheque. I do not know.

753. Chairman.—Is there any arrangement with solicitors transacting business of this kind that they should submit to you the completed documents of sale the moment the sale has been completed?—I do not think it is possible to complete a sale without actually making the payment.

754. But if you made the payment on the representation that the money was urgently required in order to effect the completion of sale, could you not require the solicitor to submit the completed document to you as proof that in fact the money was urgently required and had been applied?—We probably could take that precaution.

755. Would that not operate to prevent a recurrence of an incident of this kind? —Yes In fact we never experienced any difficulty of that kind previously.

Dairy Produce (Price Stabilisation) Acts, 1935 and 1938.

Dairy Produce (Price Stabilisation) Fund.

“38. The receipts amounted to £225,908 0s. 2d., levy being payable during the year on creamery butter, cheese, and bulk cream sold on the home market, excepting creamery butter cold stored under certain conditions, and creamery butter and raw cheese manufactured on or after 1st December, 1939. Bounties were paid on exports of creamery butter and cheese, but the rate in respect of the former product was reduced to 1d. per cwt. from 1st September, 1939, and no bounty was payable on cheese exported on or after 1st November, 1939. As will be seen from the account, the payments totalled £137,564 17s. 4d.

The payments from the Fund, under Section 41 (6), of the 1935 Act were made to the Butter Marketing Committee, and amounted to £11,832, of which £1,832 represented advances to meet the administrative expenses of the committee. Following the bringing into operation in the United Kingdom in September and October, 1939, of requisitioning orders, it was decided that the committee should arrange for the purchase and export of surplus stocks of creamery butter, and that any trading loss should be met from funds at the disposal of the Minister for Agriculture. Under these arrangements, payment of £10,000 was made to the committee in partial recoupment of the loss incurred in the disposal of approximately 42,900 cwt. of creamery butter during the period 11th November, 1939, to 31st March, 1940.

As I understand that rates of levy and bounty are regulated so as to equalise the receipts into and the payments out of the Dairy Produce (Price Stabilisation) Fund, I have inquired into the circumstances in which receipts exceeded payments by approximately £76,500, and also to what extent the balance in hand at the close of the year, £92,166 2s. 3d., was required to meet existing liabilities of the Fund.”

756. Have you anything further to say in regard to that, Mr. Maher?

Mr. Maher.—In reply to our inquiry regarding the large balance of £76,000, the Accounting Officer has informed us that owing to the international situation and the disturbed state of the export market, a large balance had accumulated, and also that it was considered desirable to maintain, for other reasons, a large balance in the fund. We understand that the balance at the end of March last, that is March, 1941, was down to £37,000.

757. Chairman.—In fact, Mr. Twomey, you maintain this balance as a sort of reserve against contingencies?—Yes. There was a good deal of butter belonging to our exporters requisitioned in September and October, and very long negotiations went on with the Ministry of Food as to the price to be paid for that requisitioned butter. It was not until a very late stage that we were able to fix it up. Naturally, that would be a charge on the Fund, bringing the price paid by the Ministry of Food up to the agreed price to producers here. Furthermore, a quantity of 40,000 cwts. which we arranged to sell to the Ministry of Food at a satisfactory price, did not cover entirely the surplus which was available for export. The additional surplus which was available for export had to be sold at about 15/- per cwt. under the price agreed with the Ministry of Food. That was a further charge on the Fund. All this was very indefinite, and we did not know up to the end of March just how much surplus we would have available for export, because we were carrying very heavy cold stored stocks that particular winter. On the whole, we thought it well to maintain a pretty large surplus in the Fund so as to be sure of being able to meet any commitments.

758. Notwithstanding this large quantity in cold store we managed to run out of butter here during the winter?—Not that season, but the following one.

759. Deputy Hughes.—How is the Butter Marketing Committee constituted? —There are three members who are representatives of the creameries, and the Chairman of the Dairy Disposal Company acts as chairman.

760. There are four altogether?—Yes.

761. Chairman.—We shall now turn to the details of the Vote on page 150. As regards Subhead E 1—Technical and Advisory Work on Agriculture—does this include preparatory work which is subsequently incorporated in the Department’s leaflets?—It does.

762. Has it occurred to you, having regard to the increased production of cereals in certain parts of the West of Ireland, that it might be desirable to prepare a leaflet indicating the best method of feeding straw to livestock?— We have not considered that.

Chairman.—I understand that the use of straw as fodder in the midland counties of Ireland is a comparatively well-established practice but in the West of Ireland that is not so. I fed straw to cattle last winter and my neighbours for miles around besought me to cease the practice as utterly disastrous. It did not prove to be disastrous. I do not think the average farmer in the West of Ireland feeds straw. Would that be your experience, Deputy O’Rourke?

Deputy O’Rourke.—Very few feed it.

Deputy Cole.—A lot depends on the way it is threshed.

763. Chairman.—I suggest to you, Mr. Twomey, that something might be said for preparing a leaflet showing how straw might be profitably used as fodder.

Deputy O’Rourke.—Some people use it after taking some of the grain out of the sheafs.

764. Chairman.—As you can see, Mr. Twomey, from the various opinions expressed around the table it is not very clear as to whether it is advisable to feed straw to cattle.

Deputy Allen.—It is quite clear.

Mr. Twomey.—I do not think that there was any doubt about it in the Department of Agriculture.

765. Deputy O’ Rourke.—They usually do not feed it to cattle in the West of Ireland.

Mr. Twomey.—I know there was a practice of feeding it to cattle from the sheaf.

Chairman.—There was a custom when oats or barley was threshed by flail of feeding a half-threshed sheaf to cattle; but the use of the threshing-machine has become general now and I think a great many people regard machine-threshed straw as simply rubbish, to be used as bad thatch or converted at once into manure.

766. In regard to Subhead E 2— Veterinary Research—last year and the year before I asked you if the Veterinary Research Department had pushed forward with investigations into the use of sulphonamide drugs for the treatment of mastitis in cattle?—They have carried out some investigations but the results are not encouraging.

I was talking yesterday to a farmer, and he told me that a big pig producer in Antrim has used it extensively and with amazing success. This farmer told me he had his cows in a cow-testing association. His best milkers got mastitis, and he used M. & B. 693 in large doses and saved them all, while his neighbour had lost one-quarter or two-quarters of the udders of his cows. To give my own personal experience, I had a pig which contracted streptococcal septicæmia after a castration operation. The wiseacres and the vet. told me that it would be better to destroy the pig, but, experimentally, I gave it a dose of prontosil, with the result that I was afterwards able to sell it for £7.

767. Deputy McMenamin.—Are you aware that the pig producer referred to is a dogmatic believer in the use of this drug?—I know our veterinary branch have investigated the matter, and they have come to the conclusion that, so far as ordinary farming conditions are concerned, it is not likely to be a success in the treatment or prevention of mastitis.

Chairman.—I can assure you that a certain Senator told me that upon his farm mastitis had become almost endemic, that he cured three cows with it, and that they are now milking in the four quarters of the udder, although in the past his experience had been that once they got mastitis, they lost at least one quarter. He said he did it on the advice of the pig producer referred to, who told him that in his experience the use of the drug was most successful. I myself had the experience of curing a pig which was comatose, and afterwards selling that pig for £7.

Deputy Allen.—It was not affected with mastitis?

Chairman.—No. It was affected with streptococcal septicæmia, which is the same as mastitis, except that this pig had not got an udder.

768. Deputy McMenamin.—Did the Department make any attempt to verify the claim of this pig producer?—Yes. It has been done not alone here, but in veterinary research departments all over the world. Under ordinary farming conditions, it does not give the good results which members have mentioned here today. The matter is still under investigation. We know the drug has been used in the case of human beings with great success, but beyond that I think no success has been claimed for it by any veterinary research station anywhere. It is not just our veterinary research station that does not think there is much in it.

769. Chairman.—Have the American Reports been studied?—Yes, and the South African reports. They have done a great deal of work on it in the big South African research station.

770. Deputy McMenamin.—Seeing that it is an innovation in the case of animals, might there not be a considerable prejudice on the part of the veterinary profession with regard to the matter? We are generally very obstinate about things like that?—I do not think scientists show any prejudice in regard to things like that.

771. There are other diseases in animals in regard to which we know that opinions have differed for many years. I myself tried all the formulae and found they were useless. I studied the thing for a number of years, and applied other remedies from my own experience of these animals. I met a man within the last fortnight who was engaged on this sort of thing himself. He had denied for years that my contention was right, but he admitted it the other day. We are very conservative on those things. We develop prejudices. Might it not be that the Veterinary Department would say: “Because we, the vets., did not discover this, it is no use. It is not the right thing”?

772. Deputy Cole.—You have not very great accommodation for carrying on those experiments at Ballsbridge?—They are carried on more at the Thorndale research station, to which there is a farm attached where animals are kept for experimental purposes.

773. Chairman.—Would it be unreasonable if I asked you to consider the desirability of conducting a specific experiment with those sulphonamide drugs? I should be glad if you would consider the possibility of having those specific experiments carried out, because my own experience, and that of men on whose judgment I rely, leads me to believe that there is something really important to be achieved here, and, as you know, mastitis is a great scourge in rural Ireland?—Yes, undoubtedly.

774. Has any research been carried out to find a substitute for acaprin specific for red water, which I believe has not been obtainable since the war broke out? —I cannot say.

775. Has your attention been directed to that?—In regard to drugs which are apt to be scarce, substitutes or alternative treatment has been looked into.

775a. At the beginning of the war I believe it was impossible to get this specific through the veterinary surgeons, and I was wondering if anything had been discovered in the meantime to take its place.

776. With regard to Subhead F 1, I discovered recently in regard to scholarships to agricultural colleges that the Department’s scheme required applicants to be farmers’ sons. Is that a desirable arrangement?—In general, an effort is made to ensure that boys who pass through the colleges have some prospect of returning to farming, but occasionally there are labourers’ sons in our colleges.

777. And, in fact, if a labourer’s son secured such a scholarship he would not be ruled out on the grounds that he was not a farmer’s son?—No.

778. I was informed by the Secretary of the County Committee of Agriculture in Roscommon that he would be ruled out? —The Roscommon Committee may attach some conditions to their own scholarship scheme, but we would not preclude such a boy.

779. Deputy Allen.—Each committee has the right to attach its own conditions? —Yes.

780. Chairman.—But, even if there is a special condition in Roscommon, there is no over-riding prohibition by the Department?—No.

781. With regard to Subhead F7, where did the agricultural instructors make tours in 1939-40? They did manage to spend £190 on a tour? Perhaps that was in the north of Scotland?—Yes. There was one tour in the north of Scotland, in the summer of 1939.

782. Deputy Hughes.—Under Subhead H, the expenditure was £14,000 less than the grant, and the foot-note says that the deliveries of lime were greatly curtailed by the severe weather. How were those grants allocated? Can adjustments be made after they have been allocated?—Yes.

783. Supposing a certain committee were in a position to take deliveries where the other committees had failed owing to severe weather conditions, could you make adjustments?—Yes. We do make adjustments in some cases.

784. You have a surplus there, so the demand does not appear to exceed the grant, taking the country generally. In Carlow, the grant certainly does not cover the demand for lime?—The total grant was £30,000, and it is divided between the various committees on the basis of the estimated needs in the various counties.

785. In how many areas, roughly, is ground lime available?—It is available in practically every county, even in the west of Ireland.

786. In its ground state?—Oh, no— ordinary lump lime which is slaked with water. There are not more than five or six centres where ground lime is actually available. It is available on a very big scale in County Carlow, and in Askeaton, County Limerick. Some firms here in Dublin also make it available, and it is available in Cork.

787. Do you encourage people to put in machines for grinding it down?—We have not done anything to encourage it.

788. In areas where you have manure distributors, I think it is the most economical way of getting an even distribution of lime?—Yes.

Chairman.—For the information of Deputy Hughes, there is an exact return of the distribution of the lime subsidy in table 1, page 27 of the appendix to the Ninth Annual Report of the Minister for Agriculture.

789. Deputy Hughes.—Has anything been done to encourage the beet factories to dry off their surplus lime and deliver it in a dried state?—For the most part it is carted away from the factories.

790. Is it done to a large extent?—It is in Mallow, at all events; I am not sure about Carlow. It would be advantageous if it were dried.

791. It has a manurial content?—It has a very slight content of potash.

792. They might possibly avail of their kiln there for drying purposes. Would Mr. Twomey make some representations to the beet factories on that matter, because I think the lime would be very useful in a dried state?—We will make representations to the beet factories about that.

793. Chairman.—In regard to Subhead M 2—Fees for Reports on Agricultural Conditions—who collects the facts for those reports?—Mainly the agricultural instructors in the various counties.

794. And they get fees for that work?— Yes.

795. Does the grant for the printing of special Departmental publications, under Subhead M 3, cover the leaflets?—Yes. The leaflets are included under that subhead.

796. Has it ever occurred to you that it might be a very economical thing to make bulk purchases of some suitable British leaflets and circulate them here? Some of them are most excellent and attractive?—Where we have not a leaflet covering the particufar subject we refer the inquirers to the Ministry of Agriculture, in London, where they can obtain copies. We do not actually act as distributing agents for the Ministry agricultural leaflets.

797. Take a leaflet like the Ministry of Agriculture leaflet on weeds, with which perhaps you are familiar; it is very beautifully produced?—Yes, with illustrations.

798. It would be prohibitively expensive for us to produce it here?—Yes.

799. But if we purchased it in bulk from Great Britain, it would reduce their cost of production and we would get the advantage of it?—Yes. I will look into the matter to see if it would be feasible.

800. Of course, some of the English ones are not suitable but many are eminently suitable?—Yes.

801. With regard to Subhead M 6— Scheme of Loans for the Purchase of Heifers—is that scheme still operating?— —Yes, it is, through the Agricultural Credit Corporation.

802. I see that some of the loans were written off as irrecoverable?—Yes.

803. Deputy Cole.—You had collateral security in respect of most of these?— Yes, there were securities, but in some cases the sureties died, or something happened which caused the security to disappear.

804. Chairman.—With regard to Subhead M 2—Bovine Tuberculosis Order, 1926—If a beast is slaughtered under this Order and it proves not to be tubercular, what compensation is payable?—In that case, full compensation is paid.

805. A sum of 50/- is paid if the beast is tubercular and if the vet. has made a mistake in diagnosis, the market value is paid?—The full market value, which is assessed beforehand.

806. Deputy Hughes.—With regard to Subhead O 4—Destructive Insects and Pests Acts, Black Scab, etc.—was any of this money expended on the extermination of the warble fly?—I do not think it comes under this subhead.

807. Chairman.—This would relate more to vegetable pests?—Yes.

808. On Subhead O 7—Agricultural Produce (Fresh Meat) Acts and Pigs and Bacon Acts—under the latter Acts, is it not true that the price fixed by the pig and bacon export committee is a fixed price according to statute and not a minimum price?—Yes.

809. Is it not true that during the last year the bacon manufacturers paid no heed whatever to the fixed price but paid above it whenever it suited their convenience to do so?—Some have paid more than the fixed price, yes.

810. Have any steps been taken to correct that procedure?—No, it would be very awkward for us to proceed against a firm for paying the farmer more than the fixed price.

811. Surely that was the whole purpose of the Act—to prevent large combines like Henry Denny and other bacon curers paying a fancy price for the purpose of knocking the small curer out of business so that the producer might be exploited when competition was eliminated?—There is, of course, a check on their export quotas.

812. Yes, but when in fact the pig supply is less than sufficient to fill the export quota, the payment of excess prices by the larger combines operates to paralyse the small curer with the result that his quota suffers in the ensuing quota period?—I think what the Board has done is to adjust the price upwards where they find curers paying more than the fixed price.

813. If there is a fixed price by law, it does not look well to see an advertisement flagrantly inserted in a newspaper by O’Mara’s, Denny’s or other firms offering prices widely at variance with those fixed by the Board?—I agree that it is undesirable that it should happen, but it is very difficult to prevent it.

814. Deputy O’Rourke.—It is only for certain types of pigs that they offer the big prices?—The firms advertising say that they are doing it honestly while all the other firms are doing it surreptitiously.

815. Chairman.—Is it a correct view to imagine that that ultimately benefits the farmers, or is it more correct to take the view that if this disparity of price is permitted, it will ultimately operate to leave the trade in the hands of the big combines, to the exclusion of the small curers who provide the element of competition at present?—There is possibly that danger.

816. And, so far as I am aware, that was one of the prime purposes of the Pigs and Bacon Act, in order to prevent the destruction of the small curers by the big curers?—Yes.

817. On Subhead O 14—Agricultural Wages Act. 1936—what is the £10,000 spent on?—Mainly in connection with salaries and wages of the staff, travelling expenses for members of the board, advertising and publicity and office expenses.

818. What measures are taken to ensure that the statutory wage is in fact paid?—The board employs a number of outdoor officers called agricultural wages inspectors who make inquiries and investigate any complaints made.

819. Are you satisfied that on the whole the statutory rate of wages is generally being paid?—We think it is.

820. Deputy McMenamin.—On Subhead O 15—Noxious Weeds Act, 1936— what is the sum of £50 for?

Chairman.—It was not spent.

Mr. Twomey.—It was a token Vote which was not intended to cover the full cost.

821. Deputy McMenamin.—Does the fact that it was not expended imply that the weeds are all destroyed?—No. We used to employ a number of temporary weed inspectors for a period of about two months each summer, but, as a matter of economy, it was decided to cease employing these men and to rely entirely on the Civic Guards to administer the Act.

822. Deputy O’Rourke.—They are all useless. The weeds inspectors were bad and the others are worse. I think it was wise to abolish the inspectors, because they were doing nothing?

Mr. Twomey.—It was found that the Guards had such a multiplicity of other duties that they were not able to give the attention they should have given to it, and there was a suggesion that we should employ temporary weed inspectors again.

Deputy McMenamin.—All that is necestary is to go into a field and look around it. It is not hard to do that.

Deputy O’Rourke.—They do not have an eye for that business.

823. Chairman.—Certainly the growth of thistles and docks—I take it that docks are deemed noxious weeds—is appalling and it is very exasperating when you cut your thistles to see your neighbour seeding down your land with thistles which he will not bother to cut.

Deputy O’Rourke.—Neither scheme was any use. The temporary inspectors were useless.

Mr. Twomey—We never had enough of them. If you want to enforce this Act properly, you would require to have a man in almost every townland to ensure that the work was done, whereas we had only one or two in each county.

824. Deputy O’Rourke.—What about the agricultural overseers? If they got something extra for doing it, the work would probably be done much better than ever it was done?—We regard it as undesirable that people with the duties of agricultural overseers, which are mainly instructional, should have any duties which would bring them into conflict with farmers, as enforcing this Act would. It is essential, in order that they should carry out their work of instruction properly, that they should keep the goodwill and friendship of all the farmers in the area, and we do not think that would be possible if they were given the duty of enforcing penal matters like the Weeds Act.

Chairman.—I think that a very sound view.

Deputy O’Rourke.—Perhaps, but the number of offenders is pretty limited, and, even if you did antagonise them, you would not be doing very much wrong.

825. Chairman.—If people came to suspect that the agricultural overseer was a sort of spy on their land, he would be very much less welcome than when he has no such function?—We do not even ask them to report cases because we do not want them to act as spies on the farmers.

Deputy Allen.—The warble fly inspectors would be suitable.

Chairman.—Oh, God save the mark!

Deputy O’Rourke.—They could not do half what they were asked to do.

Chairman.—I complimented Deputy O’Rourke for having dismissed a warble-fly inspector in our area recently for having failed to do more than visit two neighbours in the main street in the town in which he lived. What was my consternation some time afterwards to find that Deputy O’Rourke had reinstated the same man.

Deputy O’Rourke.—He was exonerated by the Department. In any case, there are none of them at that work this year.

826. Chairman.—God be praised! Is the warble-fly scheme wound up?—We did not press the county councils, in view of the foot-and-mouth epidemic, and the objection to persons visiting farms, to put the scheme into operation.

Chairman.—It is the only silver lining to the catastrophe of the foot-and-mouth epidemic.

827. Deputy Hughes.—Was there any improvement at all?—There was a distinct improvement. We kept a record of the warbled animals going out of the ports— the only bottle-neck we had—and there was a very distinct improvement in the heavily infested animals.

828. Are there any skins inspected?— Our reports in regard to hides were favourable, too. The port was the only bottle-neck we had for a check, and there was a distinct improvement there.

VOTE 53—FISHERIES.

Mr. D. Twomey, further examined.

829. Chairman.—There is a note here by the Comptroller and Auditor-General as follows:—

Subhead E 6—Steam Trawlers—Special Insurance.

“39. Steam trawlers operating from ports in this country are unable to obtain the benefit of a pooling arrangement under which ships of the mercantile marine are insured against war risks. Following representations made by the trawling company concerned it was agreed that the company should take out a special insurance policy and that the outlay should be recouped from public funds.

The charge to this subhead represents the unconditional recoupment of vouched expenditure incurred on the special insurance of nine steam trawlers for the five months ended 20th February, 1940. I understand that it is the intention that any further recoupment shall be subject to conditions to be prescribed in a formal agreement to be made between the Minister for Agriculture and the company.”

Have you any further observation to make on that, Mr. Maher?

Mr. Maher.—As stated in the second sub-paragraph, the recoupment—which amounted to £2,071—was made unconditionally, although it would appear that the execution of a formal legal document was contemplated before making any payment, and in these circumstances it was not clear what the position would be in the event of a loss, for example—whether the fleet could be maintained or whether replacement would take place.

830. Can you give us any information in regard to that, Mr. Twomey?

Mr. Twomey.—That payment of £2,071 was really more or less in the nature of a retrospective payment in respect of additional insurance already taken out. It does not cover at all what would be the ordinary insurance of steam trawlers for ordinary risk, but covered special insurance for war risk over a certain period, and then, as regards any future period, the company were to enter into an agreement with the Minister for Agriculture that, if a trawler were lost and the insurance money payable on it, that money would be used to purchase a new trawler or two new boats of an equivalent tonnage to the lost trawler. The company concerned has not seen its way to agree to that condition, and so far nothing has been done about the scheme.

831. Is it proposed to make further unconditional payments?—No.

832. So they will get no further payments in the circumstances in this regard unless they give the undertaking stipulated for?—No.

833. Deputy Brady.—Would it be possible to have insurance policies on boats in this country? Is it not only in England?—I think the policy is taken out here, or, at least, that the agent dealing with it operates from here, but I am not sure whether companies like Lloyds do not eventually cover the risk. I think they probably do.

834. Chairman.—The constitution of this company is somewhat peculiar. The fleet consists of four old trawlers and five trawlers which are on charter?—The five on charter are gone since the outbreak of the war. They have gone back. The company then owned four, and one was lost at sea, so there are only three trawlers left.

835. I take it that that disposes of the difficulties of the Comptroller and Auditor-General with regard to the payment of any future recoupment that may take place?

Mr. Maher.—That is so.

836. Chairman.—The next paragraph is as follows:—

Subhead G 3—Advances for Boats and Gear.

“40. Including the advances charged in this account, the total of advances for boats and gear to 31st March, 1940, amounted to £110,500. The half-yearly instalments of the annuities set up to repay these advances falling due to 31st March, 1940, amounted to £39,923 15s. 7d., while the sums collected by the Sea Fisheries Association from borrowers and transferred to the Department in payment of the annuity instalments amounted to £26,144 18s. 0d. The annuity instalments were, therefore, in arrear at 31st March, 1940, to the extent of £13,778 17s. 7d.”

Does that situation tend to improve, Mr. Twomey?—Distinctly, now. The increased price for fish is improving it every year.

837. Are all the boats in service?— Some of them are not, because they have become dilapidated or worn out. They are not in service at the moment and there will be difficulty eventually in collecting the instalments on some of the boats for that reason.

838. In view of the present scarcity of fish, would it not be possible to put some of them in repair?—Yes, an effort is being made to put in new engines and repair the boats, but it is very costly at the present time and there would be the danger that in reconditioning the boats the owners would be incurring a loan or debt that they might not be able to repay. However, as far as possible it is being done.

839. The next paragraph is as follows:—

Subhead G 4—Advances for General Development.

“The total of advances made to the Sea Fisheries Association for general development, including a sum of £431 12s. 8d. charged in this account, amounted, at 31st March, 1940, to £1,522 14s. 3d. As stated in previous reports this amount is repayable over a period of 20 years by half-yearly instalments, covering principal and interest. Sums totalling £87 19s. 0d. were repaid during the year and are included in the Appropriations in Aid.”

There are no arrears on this account?— No, I think that has been paid.

840. The next paragraph reads:—

Fishery Loans.

“42. As noted in the account, the Minister for Agriculture, with the consent of the Minister for Finance, has made conditional remissions during the year amounting to £406 14s. 8d. under section 2 of the Fisheries (Revision of Loans) Act, 1931. Repayments during the year, which are accounted for as Appropriations in Aid, amounted to £458 6s. 1d. and the balance outstanding on these loans at 31st March, 1940, was £21,213 10s. 6d., including arrears of £21,104 17s. 0d.”

Are the advances made under this scheme charged to revenue, or are they treated as capital items?—As capital items.

841. When the money comes back in the form of Appropriations in Aid, is that appropriated to the extinction of the capital debt due?—Yes.

842. And does not pass into ordinary revenue?—No, not to revenue.

843. Does that account tend to improve also in regard to the arrears position?— It was not improving much up to last year, but it is improving now.

VOTE 70—EXPORT SUBSIDIES.

Mr. D. Twomey, further examined.

844. Chairman.—There is a note here by the Comptroller and Auditor-General, which is as follows:—

Subhead A—Subsidies on Exports of Dairy Produce.

“89. The payments under this subhead totalled £115,780 2s. 6d. made up as follows:—

The expenditure supplemented the statutory bounty disbursed from the Dairy Produce (Price Stabilisation) Fund and certain payments made from Subhead M 7 of the Vote for Agriculture. Subsidy was paid at various rates and represented the additional amounts required to bring export values up to the approximate equivalent of the net return on home sales of creamery butter.

I am in communication with the Accounting Officer regarding the subsidies paid on exports of cheese and full cream milk powder.”

Have you any further observations to make in respect of cheese and full cream milk powder, Mr. Maher?

Mr. Maher.—We noticed that the subsidy paid on cheese during September and October, 1939, gave exporters more than the guaranteed return of 83/- per cwt., and that a reduced subsidy was paid only as from the 1st November, 1939, and no subsidy from the 1st December. The Accounting Officer has informed us, in reply to our inquiry, that the delay in changing the basis of subsidy was justified by the loss sustained by the creameries in the earlier part of the season. A somewhat similar position arose in connection with the export of milk powder. The subsidy of 12/- related to an export price of 54/- per cwt., paid throughout the year, although from July onwards the free-onrail price steadily exceeded that figure. The important point is whether the continuance of subsidies and production allowances at a higher rate than necessary is justifiable when losses have been incurred in an earlier period.

845. You told us, Mr. Twomey, that your object was to secure for Irish cheese in the British market the price ruling for New Zealand cheese?

Mr. Twomey.—Yes, we guaranteed the producers that price.

846. And your guarantee was to bring such prices as they would realise up to the New Zealand price?—Yes.

847. But, in fact, you paid subsidies even after the creameries were realising more than the New Zealand price?—Yes, but they had had losses earlier in the year. They were not able to obtain New Zealand prices earlier in the year.

848. Deputy Hughes.—Why did you not adjust the subsidy at that time rather than later on?—Well, you see, we had promised a fixed subsidy. I think the important thing is that, taking the year as a whole, the net returns from cheese were adjusted so as to ensure that they would not be more than the net returns from butter or from milk converted into butter. Butter is the main dairy product manufactured by creameries and we try to take milk, for conversion into butter, as the standard, and over the year as a whole, to ensure that those who make cheese, largely, would not be placed at any disadvantage with others who make only butter. That means that adjustments have to be made during the year, and at one time it might appear that we were paying subsidies on cheese at less than what should be paid, whereas at another period it might appear that we were paying more than what should be paid. For the year as a whole, however, we try to ensure that a creamery with this cheese output is not getting a greater net return than if it had converted its milk into butter.

849. Chairman.—You see, Mr. Twomey, the work of the Public Accounts Committee becomes extremely difficult if subsidies are to be paid on fluctuating bases which are quite impossible to check. I can see the purpose that the Department had in mind: that as between better, cheese, milk and dried milk, it was desired that there should be no advantage for one creamery engaging in the production of one of those products as opposed to another creamery engaging in the production of any of the others, but unless there is some certainty as to the basis upon which public money is to be distributed by way of bounty it is extremely difficult to know whether the money has been properly distributed or not. Is not that so?—I would not think so. Let us take an example. In this particular year, I think, we guaranteed a price of 5½d. per gallon for milk converted into butter, and then related the cheese price to that right through. As it happened, at this particular time, for various reasons the New Zealand price which we promised to the creameries for their cheese involved them in losses. After a time they were not sustaining these losses and they were getting more than the New Zealand prices; in fact, they were making more money than was necessary, but we allowed the higher rate of subsidy to run on in order to recoup them for the losses sustained earlier in the season. Otherwise the creameries would be at a distinct loss in the manufacture of cheese as compared with the manufacture of butter. We would not, in other words, have brought the operations in the cheese manufacture up to the same level as butter. The position was extremely difficult in that particular year, because the war came in September and it upset all calculations as to what the value of dairy produce would be.

850. Was the situation this, that the New Zealand price for cheese in London at a given date was uneconomic for 5½d. milk?—It was, having regard to the cost of manufacture.

851. Did your undertaking with the cheese manufacturers then imply that over and above the New Zealand price you would give them an additional sum to make cheese manufacture as profitable as butter manufacture would be when milk was 5½d. a gallon?—That was the general understanding, that we would keep the various products on a level, that over the year we would ensure that cheese manufacture would be as profitable as the manufacture of butter.

852. Deputy Hughes.—Is it possible to grant a subsidy to relate to the New Zealand price and not exceed the amount that would be granted for the manufacture of butter—can you relate one to the other?—Normally we are slightly under the New Zealand price. On this occasion our cheese sold in the market at somewhat less than the New Zealand price and we decided we would make the New Zealand price the standard at which our manufacturers would aim. The position then came about that the New Zealand price involved them in losses.

853. Chairman.—Our fundamental undertaking to the cheese manufacturers was: “We will ensure that you will get a price for cheese which will, in fact, equal your price for milk had you converted the milk into butter and sold it in the British market”?—Yes, that was the basis we went on.

854. And we had expected that the New Zealand price for cheese would represent that price or something over and above it and, in fact, it did not?—That is so. As compared with butter manufacture, they sustained losses in the manufacture and sale of cheese in the early part of the season.

855. Then, instead of giving them a restrospective payment, you allowed an excessive bounty to continue in order to compensate them for the losses they sustained in the early part of the year?—We allowed the rate of bounty to continue at the old figure into a period when, in fact, they were getting very good prices for cheese and when they could have done with a lesser bounty. We allowed them the old rate of bounty in order to compensate them for their losses.

856. Do you not think it would have been more satisfactory to ascertain the precise amount by which the subsidy had fallen short in the early part of the season and recoup the creameries by that amount rather than allow the existing rate of bounty to continue into a period when, in fact, it was excessive?—Payments out of the Exchequer would have amounted to the same thing; it would not have made any difference. It might have been a little bit clearer, but the sum actually paid out would come to the same thing in the end because in the long run they did not get more out of their cheese than was necessary to make it equivalent to butter.

857. But the underlying principle was that in every transaction the cheese producers were not to be allowed to suffer any loss?—They were not to be placed in a less advantageous position.

858. The way it has been administered has resulted in there being a distinct disadvantage at one part of the year and a material advantage at a later part of the year?—Yes.

859. It may produce ultimately the same results, but it is in conflict with the principle underlying the scheme?—Not quite.

Mr. Maher.—Our difficulty in the Audit Office is in reducing Mr. Twomey’s economic argument to a financial basis. When we are told that the continuance of the subsidy at the higher rate is justifiable on the ground that losses were previously incurred, we naturally look to see what these losses are. We do not know what these losses are and hence our difficulty in passing the subsidy claimed, which amounts in the case of cheese to £9,000 odd and in the case of milk powder to over £5,000.

860. Chairman.—That difficulty would be met if the losses sustained in the earlier part of the year were clearly ascertained and Department of Finance sanction got for a retrospective payment to meet the unforeseen losses?

Mr. Maher.—We would pass the subsidy with an explanatory note setting out that it was justifiable, but we are not in a position at the moment to say that it was justifiable.

861. Chairman.—You see, Mr. Twomey, that this system makes it quite impossible for the Comptroller and Auditor-General to certify the account. Does that difficulty present itself to you?—I cannot say that it does.

862. Deputy O’Rourke.—Have you checked the overpayments with the losses sustained previously?—We have.

863. If that check has been carried out and submitted to the Comptroller and Auditor-General, where is the difficulty? —To my mind our system is the simplest way of making an adjustment.

864. Chairman.—But if the accounts are to be passed as correct the purpose of the subsidy scheme must clearly have been achieved. Unless the Audit Office is able to ascertain the amount of the losses sustained by cheese producers in the period complained of, it does not seem possible for the Audit Office to say: “We are satisfied that this later payment was sufficient, but no more than sufficient to recoup the losses sustained in the early part of the year”?—I think that as long as the payments did not exceed the rate approved by the Minister over any period, it is all quite in order. The Minister for Agriculture may decide that, as a matter of policy. He may decide, for instance, to make the manufacture of cheese more advantageous than the manufacture of butter and he may decide to pay a rate of subsidy for three months of the year with that end in view and, provided the Department of Agriculture administer the scheme and pay no more than the rate approved by the Minister for that period, I think it is quite in order. The Minister may change the rate of subsidy for a subsequent month or two months; he is quite empowered to do so.

865. But suppose the Minister lays down that the purpose of the scheme is to secure equity between the production of butter and the production of cheese?— That is broadly so, but he is not bound to ensure that it is done to the last halfpenny and it would be quite impossible for us to arrange it.

866. Would you agree it is necessary to lay down at some stage some basis with which actual payments can be compared?—I think what is essential is that the rate of subsidy, whether for butter, or cheese or milk powder, should be approved of by the Minister over a particular period, let it be a month or two months or six months, and as long as that rate of subsidy is paid by the Department on the quantities of cheese or butter involved, I do not know that there is anything wrong in it; in fact, I think it is the only way we can work it. Is it that the Comptroller and Auditor-General wants to settle the Minister’s policy in regard to cheese?

Mr. Maher.—Oh, no.

Mr. Twomey.—The Minister may decide at any time to make cheese prices 10/per cwt. more favourable than butter prices; in fact, we have that under contemplation at the moment.

Mr. Maher.—The Comptroller’s point was that in the case of cheese 83/per cwt. was the basic price for the calculation of the subsidy and in the case of milk powder the price was 54/- per cwt.

Mr. Twomey.—There was nothing sacrosanct in this. The Minister could have made one 105/- and the other 55/if he thought it necessary.

Mr. Maher.—But we must take official cognisance of what is regarded as the basis. I should like to assure you that at no stage does the Comptroller and Auditor-General wish to interfere with the discretion of the Minister in fixing or determining any price. We are taking the price he gives us.

867. Chairman.—There does seem to be a point in this, that at some stage the mighty Ministerial mind must reach a conclusion. It cannot be in a perpetual state of fluidity. The Minister must reach some conclusion as to what is the basis of the bounty. That is communicated to the Comptroller and Auditor-General so that he may satisfy himself that the officers of the Department are not doling out money without regard to any regulation?—We are quite free to change the basis, even during the course of the year. At one stage we might make the New Zealand price the basic price and at another stage we might make the price whatever would be realised by best sellers.

868. Of course, there is no question of interfering with the policy of the Minister, but I think the Comptroller and Auditor-General has a right to demand that the Minister will arrive at some conclusion some time and that the basic price can be ascertained with certainty. That is the problem. If the Minister says: “As a matter of policy, I fix the bounty at 12/- in season and out of season and I do that for my own reasons” that is a matter for himself. All the Comptroller and Auditor-General needs is to satisfy himself that that is the sum to be paid. But there must be some certainty as to what basis the Minister wishes subsidies to be paid from?—There is, and we have a definite basis; but if, for some period of months, the Minister decides to allow a rate of bounty to continue which he knows right well is giving the cheese manufacture an advantage, he has every right to allow that to continue for a few months.

869. He is perfectly entitled, of course, but if the Minister lays down a basis in January and then fixes payment of bounty at 12/- per cwt. in August, departing from the basis laid down in January, and says: “I mean to depart from that basis for good and sufficient reasons,” is it not desirable that some official amendment of the original scheme should be placed on record in order to indicate that the Minister, fully conscious of the new situation, had reaffirmed the 12/- bounty in the new circumstances?—I must say I do not see it. As to the actual basis on which the bounty is fixed, there is nothing sacrosanct about it, there is nothing statutory about it. It is only a kind of datum line that will more or less hit off the position—putting the cheese manufacture into the position we want. The Minister does not formally in any way approve of the basis. What he does approve of is the rate of subsidy. That rate of subsidy can continue over any period the Minister desires, whether over some of that period a loss might be entailed by the producer of cheese and for another period it will be giving him more than the Minister originally thought he might get. The Minister does not, by any order he makes, fix the basis on which the original rate of bounty is determined. What he does fix and approve of is the rate of bounty, and I think it is going too far to ask us in every case to adjust the basis as we go along month by month, because the basis is only a notional thing.

870. And the concrete thing is what is fixed in the Minister’s order?—There is nothing statutory about the basis.

Mr. Maher.—It is a slight departure from what I understood to be the practice. Mr. Twomey will recollect mentioning that where production allowances had been overpaid they recovered them, and I inferentially assumed the same might apply to subsidies. If the Committee accept Mr. Twomey’s view, we in the Audit Office will be quite willing to concur in that view, so long as we know the basis.

871. Deputy Hughes.—Is the present method the best business method or the clearest way of doing this? What you are doing at the present time is to permit a loss to occur over part of the season and they sell at an advantage over another period. Would it not be better to let them furnish the amount of the loss and make good that amount and not permit the subsidy to operate so as to give a substantial profit?—That would mean investigating the costs of every creamery manufacturing cheese. You would have to find out the process costings of, say, 1 cwt. of cheese in each creamery. It would be an exceedingly difficult thing to do. There is no creamery making cheese only. Some of the creameries making cheese have butter manufacture as the principal line. They also sell cream and some make milk powder. At Mallow they do condensing. It would be next to impossible to segregate just what was the cost that should be applied to cheese. You want a more rough and ready method. I think, generally, as long as it is the Minister’s policy to keep cheese manufacture in line with butter manufacture, and when we are substantially assured of that by the rate of subsidy granted respectively to cheese and butter, we comply with anything that is required. The Minister may decide at any time that it is desirable to make cheese more attractive than butter. In fact, this very season we have that under consideration because there is a possibility that our butter may not be required on the export market, whereas there is practically an unlimited market for cheese. If things work out as we hope, it may cost the State less to subsidise the dairy farmer in cheese production as against butter production. In order to get the creameries into cheese production it may be necessary to pay them a higher rate of subsidy to make it relatively more attractive than butter. I think the Minister should be free, at any time he wants, to do that. I think Mr. Maher agrees.

Mr. Maher.—Certainly, so long as we know the basis.

872. Chairman.—What is the exact procedure in regard to export subsidies— we know the Minister has an absolute discretion?—Yes.

873. Does he make an order or say to you: “Pay 12/- this week and we will see what we will pay next week”?—He formally approves on a file what rate of subsidy should be paid over a period and that rate holds until the Minister approves of an alteration.

874. It is more or less a matter of endorsing the file?—Yes. He actually approves in his own hand-writing on the file.

875. And that remains in operation until he decides to amend it?—Yes.

876. Deputy Hughes.—Does the subsidy on butter operate on a similar basis?>—The same thing.

877. Chairman.—That discretion relates only to the export subsidies subhead, and not to the butter stabilisation scheme?—Yes.

878. Deputy Hughes.—A similar set of circumstances does not occur in relation to butter? The rate of subsidy for butter varies, too?—I understand.

879. But it is fixed to bring the requisition price up to the home price and does not exceed it or fall below it?—That is right.

880. How is it that the same system cannot be applied to cheese which can be applied to butter? You appear to have no difficulty in adjusting the butter price to meet the variation between the price here and the British price?—It is a bit different. In the case of butter the Minister decides on a definite home price for butter and the export price is brought up to that. In regard to cheese, we are trying to bring the price to what is a variable thing over which we have no control. We were trying at one time to bring it to the New Zealand price and at another time to the average price obtained by the best sellers. It is not clear-cut like the home price for butter fixed by the Minister.

881. Chairman.—In fact, what you are trying to give in the case of cheese is the home price for butter translated into the cost price of milk?—More or less.

882. Chairman.—I take it the same situation applies, Mr. Maher, to the full cream milk powder subsidy?

Mr. Maher.—Yes. The Department of Agriculture makes very involved calculations showing the relation between the milk and the powder.

Mr. Twomey.—Here, again, the object is to ensure that no creamery producing whole-cream milk powder will suffer any loss for not converting the milk into butter.

Chairman.—There is a note—paragraph 90—by the Comptroller and Auditor-General regarding Subhead B—Subsidies on Export of Eggs. I take it that this paragraph is purely informative and I do not propose to read it.

883. Is there any necessity for an export bounty on eggs at present?

Mr. Twomey.—Not at present. There is no bounty.

884. Has your attention been drawn to a very serious problem in rural Ireland, that is, the extent to which fowl are being stolen by persons concerned in consigning them to Great Britain, directly or indirectly, as live or dead fowl?—No, it has not been reported to us. We take it that that is a matter for the local Civic Guards.

885. One does not think of these things until they begin to manifest themselves. It is like horse-stealing in America. Ordinarily no precautions are taken, as you know, in rural Ireland to safeguard one’s hens. They ramble and roost wherever they please, but in recent months in the West of Ireland large-scale raids have been taking place in which large quantities of fowl have been stolen. Their necks are wrung and they are consigned to England as chickens. There is a case where people have waited until a start has been made for the town with cattle and when everyone has left the farm it is raided.

Deputy Allen.—That is an old thing. I heard of it years ago.

886. Chairman.—The country is full of fellows going around on bicycles collecting hens either legitimately or by raiding.

Mr. Twomey.—There have been some cases in regard to goats.

Chairman.—If you inquire from the poultry instructresses you will find that this is a very grave abuse.

887. There is a note by the Comptroller and Auditor-General:—

Subhead C—Subsidies on Exports of Potatoes.

“91. Subsidy at the rate of 17/6 per ton was payable on seed potatoes exported to countries other than the United Kingdom on and after 19th May, 1938.”

I suppose that trade in seed potatoes for countries other than Great Britain has been almost destroyed?—It is nearly dead, except a little to Spain.

888. It would be a great pity to see it die permanently?—Our principal trade was with the Eastern Mediterranean, Malta and Greece and it has not been possible to send potatoes there.

889. Will it be possible to maintain the production of seed potatoes under proper conditions so that we can resume the trade after the war?—We are continuing that. We have an increased sale of seed potatoes to Great Britain and an increased demand for certified seed at home and this is helping to keep the growers going for the present.

890. So there is no danger of the growers becoming disorganised or the scheme breaking down?—No.

Chairman.—There is a note by the Comptroller and Auditor-General, which reads as follows:—

Subhead D—Minor Disbursements under Subsidy Schemes of Prior Years.

“92. The payments under this subhead totalled £1,085 10s. 2d., viz:—

The expenditure in respect of horses included a payment of £943 12s. 0d. made to an exporter consequent upon a reassessment of import duty by the British Customs authorities.”

891. Deputy Hughes.—How long are we paying a subsidy on export of horses?— It was only during the economic war. This is only a retrospective payment carried over.

The witness withdrew.

The Committee adjourned at 1.15 p.m.

* Appendix XVIII.

* Appendix XIX.