Committee Reports > List of Committees > Joint > 1979 > Committee on Commercial State-Sponsored Bodies > Report No. 03 - Min Fhéir (1959) Teoranta

MIONTUAIRISC NA FIANAISE

(Minutes of Evidence)

Dé Céadaoin, 21 Márta, 1979

Wednesday, 21 March, 1979

MIN FHÉIR (1959) TEORANTA

Mr. J. B. Hynes, Chairman; Mr. E. L. Hynes, Director; Mr. W. F. Murray, Director; Mr. E. Munnelly, Director and Mr. T. O’Leary, General Manager of Min Fhéir (1959) Teoranta called and examined.

Chairman.—We welcome the Chairman of Min Fhéir, Mr. J. B. Hynes, and his colleagues.

Mr. J. B. Hynes.—We have just received a list of questions you might put to us. We can answer all of the questions, but we may have to say we may need some time to prepare answers to some questions. That is not because we are not anxious to answer your questions, but we should like to be united about this.

Chairman.—That is fine. We thank you for having come along, and we do not think we will be putting anything to you which you will not find possible to answer.

1. Senator Cooney.—I will start the ball rolling, if you will excuse the phrase, by asking what is the Irish market for grass meal?

Mr. Murray.—Now it is of the order of 10,000 to 12,000 tonnes. I would qualify that by saying that the demand now is for grass nuts—unmilled grass.

2. Senator Cooney.—Does that mean Min Fhéir are producing enough unmilled grass?

Mr. Murray.—Yes.

3. Senator Cooney.—I am wondering about the level of demand—is there a market abroad for grass nuts?

Mr. Murray.—From time to time yes, but in the past eight to ten years Canada, the US, France and other countries have been supplying this kind of feed much cheaper.

4. Senator Cooney.—Are grass nuts fed per se or as part of compounds?

Mr. Murray.—Both.

5. Senator Cooney.—Do you sell them here for consumption as they are, or to millers?

Mr. Murray.—Both. We should say that the company originally were established to produce grass meal, grass powder, in other words, min fhéir. That grass powder was used mainly as an additive to poultry feed— it made the yoke of the egg yellow. Due to subsequent events, grass meal began to have a smaller application. In more recent years the company have tended to produce grass nuts, or pellets of grass produced by compression. Having been geared initially to produce fine powder, the company sold their product in bags. Though there has been a change, we still produce some grass meal. Our main aim is to produce grass. Our product still has to be bagged because we do not have, and never had, bulk storage facilities. We are working on that. Companies who use grass nuts as an ingredient in compounds need them in bulk form at a time when we are only geared to put our product in bags. When we exported—two years ago when there was a bad season in Europe—we had to open the bags and empty the materials into bulk containers. It is one of the problems we are sorting out.

6. Chairman.—You are sorting it out?

Mr. Murray.—Yes.

7. Senator Cooney.—At present levels, what would it cost you to produce a ton, and what can you get for it?

Mr. Murray.—What you can get on the market is what the market will bear in the form of products of comparable nutrient value.

8. Senator Cooney.—It is a fluctuating feature?

Mr. Murray.—Very much so. Even in the season we are in, weather conditions this week have put £10 to £15 per tonne on grass meal. It would depend on the products being brought forward. In present weather conditions there would be a scarcity of the amounts being brought forward, and of course the spot price would go up.

9. Senator Cooney.—How attractive is your product as an additive in compounds— are there many more attractive additives available to the millers?

Mr. Murray.—I will answer that in two ways. If you go back a few years, it was very attractive because it has the carotene which gives the colouring to egg yoke and provides the same benefit in the feed for small pigs. Now it can take its place with comparable feeds on an energy/protein basis, though it is not the greatest.

10. Senator Cooney.—It would not be the most desirable additive? Can millers get superior additives?

Mr. Murray.—They can get cheaper additives by importing them from various countries.

11. Senator Cooney.—Did you get some sort of subsidy from the EEC to deal with that problem?

Mr. J. B. Hynes.—Since the energy crisis we have got a subsidy which has risen from £7 to £22 since last year. That presupposes certain qualities which we are enabled to use.

12. Senator Cooney.—Is that because you are not competitive?

Mr. J. B. Hynes.—It really arises out of the energy crisis. Grass meal does involve fertiliser, fuel and power all of which have increased stiffly in price. It means a big bill in the production. It is an energy related product and because of that the EEC have tempered the wind to the shorn lamb and given the subsidy for it.

13. Chairman.—That is £22 on a tonne which is going to be sold at approximately what?

Mr. J. B. Hynes.—We sell it at various prices, but let us call it £100 a tonne which is a fair figure.

14. Senator Cooney.—What is the present price?

Mr. O’Leary.—Our market situation is divided, so to speak, into two sections. One would be the wholesaler and commercial market and the other the farmer market. The price to the farmers would be in the region of £105 per tonne collected ex factory whereas the price to merchants would be £90 per tonne collected from the factory, so there is that kind of leeway there.

15. Chairman.—Are we talking about a subsidy of £22 perhaps as compared with something you are selling at about £100?

Mr. J. B. Hynes.—The subsidy would be over and above the selling price at the store.

16. Senator Cooney.—What is your cost of producing that?

Mr. J. B. Hynes.—The cost of production varies. For our last season we have added in the interest charges from years gone by and this has more or less compounded our problems and pushed our costs right up to over the £100 mark.

17. Senator Cooney.—How much over £100?

Mr. O’Leary.—At the moment our cost of production is about £90 to £95.

18. Senator Cooney.—Is that the straight cost or have you added in the other things?

Mr. O’Leary.—No, these would be added afterwards.

19. Senator Cooney.—What is the total?

Mr. O’Leary.—The total would be in the region of £110. The prices we are talking about at the moment of, say, £105 a tonne are in existence for only the last few weeks. We have been selling basically at £85 to £90 per tonne right through the bulk of the season. We can say £105 but it would be fairer to speak in terms of £80 a tonne which would be a more realistic price judging on what has happened in the last few years.

20. Senator Cooney.—It seems that you were selling to a very volatile market at fluctuating prices?

Mr. O’Leary.—In the last few years we have been trying to emphasise the fact that we have now changed over basically to a cube which is designed to service the local market. This would help to stabilise matters in that we will not be relying on the compounder, who obviously has a range of products at his price and who can generally suit himself. In the last few years we have been supplying local farmers either directly or through local merchants, so we are more or less consolidating our position in the Mayo area and going into Galway and Sligo. This is our intention. Cubes are something with which we have been in business only since 1973. It is a new market and it will take time.

21. Senator Cooney.—Will it be a steadier market?

Mr. O’Leary.—Yes.

Mr. Murray.—There are a few highly relevant percentage figures. Back in 1960 the total compound feed market was 328,000 tons and of that 7.5 per cent was cattle rationing, 76 per cent pig rationing and 15 per cent was for poultry. At present the percentages are cattle 48.9, pigs 29.4 and poultry 15.3. The point is that the feed that Min Fhéir are producing is a ruminant feed and the cattle market is the one that is moving. In that sense the people who came into the business afterwards did not produce meal at all. They would go straight in and produce the grass nuts.

22. Deputy O’Donnell.—How many producers are there of grass meal in the country?

Mr. J. B. Hynes.—At present there are five.

23. Deputy O’Donnell.—How many of those are private enterprise?

Mr. J. B. Hynes.—Three.

24. Deputy O’Donnell.—Where are they located?

Mr. J. B. Hynes.—One in Wexford, one in Edenderry, one in Balrath in Meath: and there is Min Fhéir and the Irish Sugar Company.

25. Deputy O’Donnell.—I am familiar with this operation. There is the old saying that the man who can make two blades of grass grow where only one grew before is worthy of commendation, but we are talking about making grass grow where nothing grew before. I was very impressed with the general situation and how this operation, apart from the economics of it and the performance of the Company, has proved that it is possible to grow grass of a very high feed value in a region which hitherto had been regarded as unproductive of anything other than peat. Would I be right in saying that the scale of production here and the amount of land on which you are operating by modern criteria is small and limited? I notice that one of your first proposals submitted following the investigation was for a partly developed acreage with a view to increasing grass production and utilising the existing plant to full capacity. I got the impression that you were limited to working a very limited acreage. I want to ask for the key to the whole thing. With the expanding acreage and greater production, with modern equipment and the change to the new turf burner system what are the possibilities of this operation?

Mr. J. B. Hynes.—We have in all a total 2,000 acres and of that 777 are under grass production. Some other acreage has been partly developed some years back. The rest has not been touched. The plant that we have has a capacity, taking one year with another depending on how wet it is, to produce of the order of 3,200 tonnes a year. The plant at the moment up to now has been totally on oil. It is now reckoned that we could probably improve the through-put through the existing plant. We have an active plan before the Government to replace the oil-fired furnaces with turf-fired furnaces of which one is under construction at the moment. Until we look at that one working and find out what kind of capacity it gives us on half the plant we will not be able to say how much the existing plant would process, taking one year with another. If we were to develop more land to grow grass on we might have to consider putting in additional drying equipment, additional furnaces. At the moment our objective is to improve the economics of the operation. We have already reduced the fertiliser cost input. We have, with the assistance of the IIRS, improved the plant and improved the efficiency of the drying operation. We are currently installing turf fuel furnaces. We installed one this year and another will be installed next year. When the two are in it will greatly reduce the actual cost of production.

I am deliberately saying the actual cost of production, which is a different thing from the total cost. Big items of expenditure in production are the cost of fertilisers, labour, power, mainly oil, and some electric power. We spend a great amount of money on repairs, machinery parts and packing which brings up the production price. On top of that we naturally have to add charges for rates, insurance, salaries, telephone, travelling and depreciation. We also have a problem in that the company have over the years accumulated a substantial debt to the Sugar Company and to NET, our fertiliser suppliers. We also have a very large overdraft from the bank. I need not tell you that the cost of interest, particularly in recent months, has become exceedingly burdensome.

Mr. E. L. Hynes.—Our production costs include between £12 and £14 per tonne purely for interest on borrowings.

26. Deputy O’Donnell.—Is the capacity of the plant able to cater for production from the full 2,000 acres?

Mr. J. B. Hynes.—No.

27. Deputy O’Donnell.—What is the actual capacity?

Mr. E. L. Hynes.—There are 777 acres of grass which is harvested. There are three crops taken each season, sometimes four, which is chopped on the field and then brought in. It is necessary, in order to bring bog into productive use, to put main drainage through it and to leave it for a couple of years while this process works. It is only then that we can rotovate it. We put in main drainage on another 400 acres and we have enough productive capacity to take the full output of that acreage with the existing drying and handling facilities. We did one levelling on it. We built a bridge over a river to give us access to it. We then ran flat out of money and we have not been able to do anything with that 400 acres during the last six years.

28. Deputy O’Donnell.—A number of factors have been mentioned here. In view of the fact that there is unlimited acreage of bog land and an unlimited supply of peat was it considered initially to have the energy from turf rather than oil?

Mr. J. B. Hynes.—I am only in the company three years. Initially there were furnaces which burnt turf.

29. Deputy O’Donnell.—There will be a substantial change with the change-over to turf, particularly when one takes the escalating price of oil into consideration. If you re-equip and expand the acreage can this be made a viable proposition?

Mr. J. B. Hynes.—We have presented a report* to the Department in which we attempt to show how this can be viable on the basis of (a) relieving us of the very great burden of debt and (b) switching to turf fuel and the other matters which I mentioned already. In the report we presented to the Department we have established that in the first few years we can reduce the actual cost of production to a level which would give us a 5 per cent return on capital.

30. Chairman.—What would be your production?

Mr. J. B. Hynes.—I am still at the 3,200 tonnes. We are talking about bringing our tonnage up to 4,000 in the initial stages. We believe we will get a return on capital of 9.2 per cent. I can make those figures available to you.

31. Chairman.—What would be your maximum production after the investment?

Mr. E. L. Hynes.—Between 4,000 and 4,500 tonnes.

32. Chairman.—Approximately what share of the market would that be at the present time?

Mr. Murray.—At the present time it would be about one-third of the market. In relation to Min Fhéir and the Sugar Company it is important to realise that our production is on bog land and there is no alternative crop whereas the other producers produce on mineral soil. You inquired about the value of our procedure. Trial work was done with the Institute and it was established that the ideal thing is a 50-50, grass-barley production. The people producing grass on mineral soil grow barley as well as grass. All those producers are compounding on their grass base.

33. Chairman.—Are the grass meal and the grass nuts as good in quality as that of your competitors?

Mr. Murray.—Not quite. It would be very difficult to have that. The quality of the grass varies very much with the period when it is cut. Every producer, at a particular stage, has very high quality grass because it is being cut at the ideal stage. When you are working on mineral soil you have a better chance of having a good cut than you have when you are working on a bog.

34. Deputy O’Donnell.—A very crucial point arises here. We are considering the future viability of this operation. In many ways it is an ideal operation putting non productive land into pretty good productivity, processing grass and so forth. A detailed examination of Min Fhéir was carried out in 1976/77 by NET. As a result of this examination NET made certain proposals which were submitted by Min Fhéir to the Department of Industry, Commerce and Energy for approval, but they were not proceeded with. In the course of a Departmental memorandum it is stated:

…following further consultations between Departmental officials and Min Fhéir and a reassessment of the market situation and the future for grass meal production, it was clear that the development proposals as envisaged would not ensure the future viability of the Company.

Mr. J. B. Hynes.—That relates to a presentation made by us in May 1977. At that time we were only able to implement savings, with the assistance of the IIRS. on fertiliser costs and we had rehabilitated some of the machinery. We envisaged certain savings and an income of £100 a tonne. At the time there was a subsidy of £7. As it happened, we got the kind of money we were talking about in the earlier part of the season. Then, when the prices fell, the Department naturally were able to establish that prices were not as buoyant as we had expected and found that the project as we initially presented it was not viable. We had then to revise our proposals and adopt a more radical approach which meant chopping the fuel cost. That meant a capital investment for turf furnaces. We had also to chop the interest charges for the old debts which was about £12 per tonne. The subsequent presentation which we made to the Department on 7 September 1978 was made on that basis. This brought our production costs down. As well, we took advantage of the £22 per tonne subsidy which meant that if we implemented the proposals on the basis of present capacity, including cutting our own turf, we would be talking about making a return of about 5 per cent on the total investment. In effect what we were saying was that it is a viable operation. It has a steady income and is giving well over £100,000 in wages, salaries and services in the area. We felt it was an operation that we could recommend to the Government.

Naturally enough, we were anxious to get to the turf burning stage. Civil service procedures take a bit of time but the Minister has approved our efforts and has authorised us to instal the furnace. The first furnace is completed since last week; we are only waiting for the firebricks. We are now ready to run one of the two furnaces on turf. We believe this will reduce costs. The real problem in the company is the dead weight of the old debts.

35. Deputy O’Donnell.—I am quite clear now; thanks for the explanation. Assuming we write off the dead weight of debt and take into account the restructuring and reorganisation you have outlined and other improvements envisaged, do the board think that the operation can be viable?

Mr. J. B. Hynes.—Yes, if one calls viability——

Deputy O’Donnell.—I am just asking for an opinion.

Mr. J. B. Hynes.—Yes, we would think so. That is the basis on which we made our presentation to the Department.

36. Chairman.—On the basis of writing off the old debts?

Mr. J. B. Hynes.—Yes. We must also turn to turf and we must realise that we must bring in additional acreage in the years ahead, because inescapable basic costs continue to go up. If we do not increase the tons passing through the plant, obviously the basic charges, the basic cost per ton, will go up. It does not necessarily follow that the price achieved in the market place goes up at the same rate. Our experience is that it goes up, but a little slower.

37. Chairman.—Are the board saying that they can service the approximate £320,000 of new capital, or are they saying that they could service the entire £730,000 which includes debts?

Mr. J. B. Hynes.—No. To justify additional investment which we can service we must be relieved of the old debt.

38. Chairman.—A total write-off?

Mr. J. B. Hynes.—Yes.

Mr. E. L. Hynes.—Of the accumulated deficit of £223,475 for 1977, I would hazard a guess that more than 50 per cent of that is rolled up interest. That is the impact that the starvation of capital for the company has had.

39. Chairman.—The debts at the moment are something over £400,000, is that not right?

Mr. E. L. Hynes.—I am talking about the accumulated deficit from trading. We had run up a deficit of £223,475. Our borrowings at the moment are balanced off by a starting trading deficit as well.

40. Deputy L. Lawlor.—Will the increased volume of production pull down the price per tonne that one can get?

Mr. J. B. Hynes.—No. I have already explained that we had been selling to compounders, which is probably the worst market for us. We have changed that by degrees and we are now making a big drive to sell to farmers and merchants direct. The more we do that, the better the price we get. There is no problem about flexibility. It is not like having too much of something and the price goes down. It is not like a good wheat crop. The input we make into animal feed is such a small fraction that if all of us had a good year it would not have a very great impact.

41. Deputy L. Lawlor.—Do the board support the stated intention that a sales force be developed to monitor the changes in the marketing situation in counties other than the counties surrounding the outlet?

Mr. J. B. Hynes.—We have the problem that this is a very small company. It cannot carry enormous overheads. In the past, part of the problem was that the non-executive directors had to offer their services and assist in making sales for the company. That was not a very satisfactory arrangement. We now have Mr. O’Leary as full time chief executive. We did not have a full time chief executive until 1 July last. We have been running on shoe strings everywhere. Now we have a full time chief executive, part of whose job is to make contracts and to employ some people on a commission basis to spread our gospel.

42. Deputy L. Lawlor.—Have the board any marketing staff at the moment?

Mr. E. L. Hynes.—Mr. Murray, who is marketing manager with Comhlucht Siúicre Éireann has been actively involved. Over several years we were running our marketing operations basically parallel with them because they have a structure with access to market information. That is the other leg of our marketing.

43. Chairman.—Are they competing with the board, in a sense?

Mr. E. L. Hynes.—They are also producers, but in terms of the overall market it makes sense that the combined output of both plants should be marketed together, because they are basically in the same area.

44. Deputy O’Donnell.—Have the board any idea of the current cost per acre of bringing the bogland into grass production?

Mr. J. B. Hynes.—It is years since we brought bogland into production. It was long before my time.

45. Deputy O’Donnell.—Would it be possible to find that figure?

Mr. J. B. Hynes.—Yes.

Mr. E. L. Hynes.—The main drains have been put in and we have been draining for some years. That work is done by contract, either by hiring machines from Bord na Mona or by giving them a contract to do it. There is the drainage aspect, the rotovating and reseeding plus some road building. Certainly, we can get the costs on that.

46. Deputy O’Donnell.—Reference has been made to the reorientation of your marketing strategy in regard to selling to local farmers. In my opinion there is a good possibility here, particularly in regard to substantial agricultural development in Erris—increasing the numbers of cows, livestock in general, and boosting land reclamation and farming in general. Would you envisage that your future marketing strategy should be geared to becoming part of the agricultural economy of the Erris area?

Mr. J. B. Hynes.—That would be our aim. Mr. Munnelly is a local man and can give you an idea.

Mr. Munnelly.—Comparatively, we are selling a new product, and anyone whom we are selling to is inclined to come back to buy it again. They find this as good for cattle feeding as any other product. I am feeding 25 cattle on it this year, the first year ever, and I find it has as good a feeding value as barley.

47. Deputy L. Lawlor.—Do you think North Connacht Farmers are making a product comparable with yours?

Mr. J. B. Hynes.—I suppose all compounders are competing against us. They would have the difficulty of producing compounds composed of imported feedstuffs and they have to contend with haulage costs.

48. Deputy L. Lawlor.—Under some EEC schemes they qualify for grants towards their capital investments. At the moment your company are at a crossroads and have not got the sanction to proceed with capital investment. Is that crucial in this particular year, or how long can you hold?

Mr. J. B. Hynes.—I said earlier that the Minister has authorised us to go ahead with the furnaces. We are being reason able in this regard. The biggest turf furnace in the country at the moment is at Tullamore with six million B.T.U. What we require at the moment are two of 10 million B.T.U. each. My engineers have told me it would be advisable to put them in one at a time so that production would not be interrupted. One furnace is virtually ready to run. Obviously, we are still carrying the burden of the interest charges we spoke of earlier, but we will be getting the benefit of cheaper fuel. However, effectively we are slipping a year because we should be engaged now in developing the additional 400 acres. That is a slow job. Drainage was done, but the original problem has arisen again—the drains need to be cleaned out and redone. We feel badly because we cannot get at it quickly. The company have the problem of having had to defer things.

49. Chairman.—Lack of staff, lack of money, I suppose?

Mr. J. B. Hynes.—Money is the main problem. We are moving and we want to be able to keep moving.

50. Senator Cooney.—What is the cost of the new furnace?

Mr. J. B. Hynes.—The cost of the two new furnaces is £45,000. The second furnace will be installed next year, and the job will then be completed.

51. Deputy L. Lawlor.—Is it possible to repeat grass crops on the 777 acres indefinitely or do you have to impose a rest period?

Mr. J. B. Hynes.—We have to dress it first with limestone, and then a reseeding programme must be done. The cost of this goes up, and of course if you want to win you must have more acreage.

52. Chairman.—Looking ahead, which is the bigger problem, production or confidence in ability to market?

Mr. E. L. Hynes.—Production is of great concern to me, naturally. We have been producing grass since 1964, so we know how to produce grass in regular quantities. subject to extremes in climate, mainly rain. What I mean is that the actual production has been about three thousand to three thousand four hundred tonnes a year. So we know how to produce in terms of threatening weather and how the ground is behaving. Therefore, on a production basis, we have the experience.

53. Chairman.—If you produce good grass, is the problem more or less solved? I mean, if you have not good grass can you make a good product?

Mr. E. L. Hynes.—Generally speaking, grass is the percentage protein, and there are three main basic grades. A figure of 13 per cent has been mentioned in the context of qualifying for EEC grants. Most of us consider it should be higher than 13 per cent. Taking the average for the season, I do not think we would have difficulty in making that grade, but I think they have raised it to 14 per cent. On the question of the grass produced vis-à-vis other products, in general it is good. I am sure it could be improved——

54. Chairman.—Then could we take the question of what you are turning the grass into? I mean, are you satisfied that you are producing a sophisticated marketable meal, or not?

Mr. Murray.—Let us take the point you made about producing and marketing. We are producing enough unmilled grass nuts, and if the proposition put forward about storing in bulk were approved, all of the production would be in unmilled grass nuts, and we would have the flexibility we have never had. From time to time, the compounders will pay us very well, but time is the factor. To avail of such a situation, we must be able to deliver in bulk, and be able to store in bulk. In our early days, nearly all our compounders took in their required ingredients in bags. Very few of them do that nowadays—they want what they need in bulk. We cannot supply in bulk. Allowing bulk storage, we would have the ability to dish out our product at any time to any merchant. We would then have the flexibility to make a meal of it in the market place, so to speak. If we had the storage facilities we would have the ultimate in flexibility, because we could bag off at any time.

55. Chairman.—Are concentrates not becoming a big part of the market? Could your product qualify for concentrates?

Mr. Murray.—Yes, let us take general compounds. Rations usually are made up on energy and protein bases. Normally, a mixture is compounded of both, with 3 to 3½ per cent supplementation. The percentage of supplementation is small.

Senator Cooney.—I take it that the answer to the Chairman is that extra sales can be achieved provided you can have bulk storage and thereby bulk delivery.

56. Deputy L. Lawlor.—Should your activities merge with those of the Irish Sugar Company? Is there any co-operation? Min Fhéir’s submission to the Department in September 1978* mentions how the board of Min Fhéir have noted the suggestion that the company might be absorbed by some other organisation. Would the lightening of your overhead burden allow you to carry out your overall function better? Are NET going to continue to support you on an ad hoc basis?

Mr. J. B. Hynes.—I will answer the last question first. NET were asked by the Minister to support a situation where Min Fhéir, unhappily, were unable to pay for fertilisers. NET did make fertilisers available at an economic but low cost. In the figures before us you will see that interest is charged on the outstanding costs as in the case of the Irish Sugar Company’s products supplied earlier. Naturally enough, NET would not be willing to adopt a lame duck and kep it going for ever. When the Minister invited us to be involved and asked me to be Chairman, the board of NET agreed on the basis that it should make some contribution particularly to the far west. However, it was not envisaged that NET would continue to offer subventions to this company. The purpose of the operation is to make them stand up and to be seen to stand up on their own. It does not mean that there might not be engineering or other assistance offered from Irish resources, but in regard to assistance of cash the answer is no.

57. Deputy O’Donnell.—I have in mind North Connacht Farmers and co-operatives, and I am talking in the context of the marketing orientation towards local farmers. Has the possibility been explored of a participation by the local co-operative enterprises in the Company?

Mr. J. B. Hynes.—The fairest answer is that in the present position of the Company you could offer nothing except anguish and expense. The board would feel that if they operate this thing or get to a stage where it is viable, then we could look for our friends who might participate in it, but if it were offered to them now they would certainly say no.

58. Deputy L. Lawlor.—The situation is complicated by the fact that Min Fhéir come under the Department of Industry. Commerce and Energy, and the Sugar Company, their competitors, come under the Department of Finance. Is there any problem which would prevent integration to rationalise the overheads?

Mr. J. B. Hynes.—I do not think there is any problem as far as the board of this company are concerned. Our purpose is to maintain this thing as a going concern employing people and commanding services locally. We have no vested interest in remaining ourselves as a board. If the board could be merged with the Irish Sugar Company, for instance, then we would not need to worry about this as long as it continued. We have made that clear to the Department. The Irish Sugar Company have indicated their view to the Department, and their view is that if the current proposals are implemented the Irish Sugar Company will feel themselves to be in a position to look at absorbing this operation.

59. Deputy L. Lawlor.—I would like to comment on the overheads. The overheads, excluding interest, for last year were under £30,000. If it were an umbrella company or larger company the overheads could have been substantially greater.

Mr. E. L. Hynes.—I was carrying the can for several years when we had no directors and I did everything but cut the grass. The Irish Sugar Company provided us with engineering services constantly without any charge whatsoever and services of other people without charging even travelling expenses. Similarly when N.E.T. came on the scene there were a lot of people swarming in and out and not a penny charged for their services.

60. Senator Cooney.—How important is this operation to the general wellbeing of the area where it is located?

Mr. Munnelly.—It is very important because there is no other source of employment there now. It is becoming more important because most of the men around there were fishermen. Now fishing has been cut off from them and they will be without their livelihood from now on. They are cut down to four days a week and for some of them I do not envisage any fishing this year. Therefore Min Fhéir is mighty important to the area.

61. Senator Cooney.—Will the change to turf fueling lead to extra employment?

Mr. Munnelly.—It will.

62. Senator Cooney.—Will there be any surplus turf cut for sale?

Mr. J. B. Hynes.—Yes. In the first year we are going to buy turf from Bord na Mona. In the current year we are going to drain some of our bog, acting on advice given to us by Bord na Mona. with the intent that we will have turf cut on it for our own consumption next year, and we hope in a subsequent year to cut some for our own consumption and for sale. We want to do it in stages.

63. Senator Cooney.—Does your financial proposition include the cost of this extra turf cutting?

Mr. J. B. Hynes.—We put that into it, but it does not follow that we would equip ourselves with turf-cutting machines. There are turf-cutting machines in the west of Ireland for hire from locals and we hire a lot of machinery at the moment. That helps people to maintain their business. This year we have sought quotations from locals and we have got quotations stating that they will cut turf on our bog and leave it to us to save the turf afterwards.

64. Chairman.—How many men have you employed at the moment?

Mr. O’Leary.—In the season, which starts in May and ends in November, we would have upwards of 30 people directly employed. These would be basically small farmers, who would be claiming the dole.

65. Deputy L. Lawlor.—What period would that be approximately?

Mr. O’Leary.—From 1 May to 1 November or even mid-November, depending on weather conditions. These would be basically small farmers who would have between ten and 20 acres and who would be depending on what we are doing. These people return to us year after year. It is not a question of different men each year. We can rely on our staff. They are mostly married with families.

66. Chairman.—How many full-time people have you all the year round?

Mr. O’Leary.—All the year round we have approximately 10 to 14 people, depending on what is on.

67. Chairman.—Suppose your plans are put into operation and you bring your production up to 3,200 tonnes or something over that and you are providing most of your own turf. Could you give a rough estimate as to what your employment would be in these circumstances?

Mr. O’Leary.—The existing machinery would absorb a fair amount of the extra production. Obviously we would have to get bigger machines with a greater capacity. On the field—this would have to be checked out—I would say half a dozen people right through the whole process. That would be solely on the grass operation. With regard to the turf, if one were to go into manual operation cutting, that is if harvesting were to be handled manually, we would obviously be speaking of a fairly substantial labour force which would be a problem to find in the first place. The general opinion from Bord na Mona, who are currently involved in the bog land, is that in the long term it would be rather foolish to depend on a manual operation. It is important to have a turning and gathering machine. In that situation we would need a half dozen men who would be operators.

68. Chairman.—That would be for six months in the year?

Mr. O’Leary.—It would be a six months operation basically. There might be some turf transported from the bog in the off season but basically it would be seasonal.

69. Chairman.—Would your expanded capacity from the two furnaces and so on dramatically increase the number employed?

Mr. E. L. Hynes.—No. We spend over £30,000 on salaries, wages and services to those who bring in their own machines.

70. Chairman.—You would have contract labour?

Mr. O’Leary.—Yes.

Mr. E. L. Hynes.—Small farmers in the area do contract work. They bring in their own machines and do cutting and hauling operations. They do one or two shifts in the high summer season and they then work on their own holdings. They would not be able to have the tractors and other machinery for their own holdings if they did not have those contracts with us.

71. Deputy O’Donnell.—You have spoken about, production, processing and marketing of grass. The question of research is very applicable here. An Foras Talúntais have a research station at Glenamoy. What type of liaison is there between them and Min Fhéir?

Mr. J. B. Hynes.—One of Min Fhéir’s directors is a director of the Agricultural Institute.

72. Deputy O’Donnell.—Is there scope for greater co-operation between the two in relation to research?

Mr. J. B. Hynes.—We have full co-operation from the Institute. We have raised with them various alternative things we might do and we get advice from them.

73. Senator Cooney.—Have the Sugar Company done any research into this grass production?

Mr. Murray.—Yes.

74. Senator Cooney.—What type of work is done?

Mr. Murray.—There is co-operation between them and the Institute and between the Institute and us. It is a joint research matter.

Mr. E. L. Hynes.—It is very important for the Company to get an injection of capital fairly soon. The Company are a limited company and the directors are required to act within the same constraints as apply to the directors of any other limited company. They are not permitted to trade at a loss. If they do they assume personal liabilities to creditors. We reached that stage in 1976 and we advised the Department of Industry and Commerce that we were unable to meet our liabilities as they became due. We advised them that we had actually to cease production and we requested them to find us a small amount of capital but they were unable to give us this guarantee. The position deteriorated and our liabilities have grown. If it were not for the subventions from the Sugar Company and NET we would not have been able to carry on.

75. Deputy O’Donnell.—Are you saying that it is an absolute prerequisite for the implementation of your new plans that you get capital?

Mr. J. B. Hynes.—Our proposals include new legislation because without it we cannot have additional capital. When we are talking about new legislation we are talking about powers which are not in the existing legislation.

76. Deputy L. Lawlor.—You have reached the stage where you know what you want to do but you need additional capital?

Mr. E. L. Hynes.—We are actually broke.

77. Senator Cooney.—With the £730,000 you would be able to pay your debts and then get on with your development programme?

Mr. E. L. Hynes.—This has been fully examined by the IIRS, the Agricultural Institute, Bord na Mona, the Sugar Company and NET.

78. Chairman.—Are you certain you can make a go of it?

Mr. E. L. Hynes.—It is not easy. We probably could make more money working as hard in some other organisation but this is in the West.

79. Senator Cooney.—This is very important. Do you regard this as a kind of social obligation as distinct from anything else? Is it socially desirable that this continue? Would you put your own money into it?

Mr. J. B. Hynes.—I doubt if anybody would put money into something which only gave a 5 per cent return. This must be seen as very largely a socially desirable thing. If this operation collapsed there would be a disastrous hole in the economy of the locality.

80. Senator Cooney.—In relation to the research into sales, is the information for that provided by the Sugar Company?

Mr. E. L. Hynes.—One of their directors and our chief executive, Mr. Tadhg O’Leary, have gone into research. There is great co-operation.

Mr. J. B. Hynes.—Production is at the maximum for eight months at the end of which demand starts. Nobody wants to buy in advance. They want it in the autumn.

81. Deputy L. Lawlor.—What sort of acreage have the Sugar Company under production?

Mr. Murray.—There are still 1,500 acres of bog but it is not all being worked. About 500 acres are in production under grass. Bord na Mona are interested in the bog.

82. Senator Cooney.—Do you do a cost comparison between the Sugar Company and Min Fhéir?

Mr. Murray.—We do. Their manager and Mr. Tadhg O’Leary meet regularly and exchange information of all kinds.

83. Senator Cooney.—Do you compete in the market place?

Mr. O’Leary.—No. In fact, we serve two different locations. I look after the northern end and they look after the midlands.

84. Deputy Fitzsimons.—Are there many producers in the private sector, up and down the country?

Mr. Murray.—There are only three now.

85. Deputy Fitzsimons.—In my constituency in Balrath in County Meath there is one.

Mr. Murray.—That is correct.

86. Deputy Fitzsimons.—He seems to be fairly successful.

Mr. Murray.—Yes. He runs a very integrated operation. He buys some stuff from us. He is not in opposition to us.

Mr. E. L. Hynes.—He is almost a customer. He has a very integrated operation.

Mr. Murray.—He is in a good feeding area.

87. Deputy L. Lawlor.—Is there any official connection with North Connacht Farmers, or is it that individual members of it purchase your products?

Mr. O’Leary.—It is very much a case of looking for groups. There is nothing very formal about this.

88. Chairman.—What is the position of Mr. J. B. Hynes. In his NET capacity, about money owed to him? Has he reached a stage where he must demand this?

Mr. J. B. Hynes.—NET supplies fertilisers for this area in the ever present hope that the Government will come up with the capital.

89. Chairman.—Is this at the direction of the Government?

Mr. J. B. Hynes.—We were requested to support the Company until such time as the matter could be reviewed. In the event of an agreeable review, we made the proposals. If we pull out the plug on the buying of fertiliser, grass will not grow or at least it will be of very poor quality and the value would drop by at least 50 per cent.

Mr. E. L. Hynes—In the year of our maximum financial troubles we could not put down spring grass and it cost us several hundred pounds in production.

90. Chairman.—I take it that NET cannot go on indefinitely like this?

Mr. J. B. Hynes.—We cannot. It is going to be a worry, because we did not envisage that it would go on for so many years. We thought it would have been solved in the first year.

91. Chairman.—NET is owed something like £157,000?

Mr. J. B. Hynes.—Apart from what we are owed, it would be disastrous to shut down Min Fhéir. We have put it to the Department that if somebody wants to shut it down let them do it, but do not let it be us.

Chairman.—We may write to you to clear up a few points.

The witnesses withdrew.

Mr. William Roche, General Manager of Associated Activities Division, Comhlucht Siúicre Éireann Teoranta, called and examined.

92. Chairman.—Comhlucht Siuicre Eireann have been topping up Min Fhéir for years?

Mr. Roche.—We have been associated with it, anyway.

93. Chairman.—Your Company is owed something over £80,000, is not that right?

Mr. Roche.—That is right. I have a breakdown of it here. It is mainly fertiliser and feeding stuffs such as molasses. The total, when it is all added up, would be £90,495. £80,000 was thrown out as a round figure a couple of years back and possibly the difference in the meantime might be interest. There is an interest element of approximately £42,000. The main balance was £107,000 for fertilisers and £30,000 for molasses. We had men up to do jobs on occasions, so there were salaries for services and sundry expenses in the region of £10,000, which brought the total to £188,000. It is less than that now. We hired a machine from them which cost £1,500, we bought some grass meal from them at £28,000 and they made payments of £68,000 which meant that £98,000 was to be deducted from the £188,000 leaving a net balance today of about £90,000.

94. Senator Cooney.—How much for services, advice and consultancies?

Mr. Roche.—£9,899.

95. Senator Cooney.—Was that a continuing thing or a once off thing?

Mr. Roche.—That was pretty well a once off service. In the early 1970s we put in a lot of work in there. We had a manager from the Sugar Company in Tuam as acting manager of Min Fhéir for two years, and that would be his salary and travelling expenses mostly.

96. Senator Cooney.—What variety of nuts does your company produce in Gowla?

Mr. Roche.—We produce grass meal in a nut form, grass meal in powder form and calmag nuts which are mainly a grass meal and molasses mixture with 12½ per cent calcine magnesite which is for special feeding to livestock at this time of the year before they go out on grass. It prevents certain animal diseases. We also produce molassed grass meal for which we have a fair business. One of our big customers takes 1,000 tons of this per year from us. We are able to dispose of all of our grass meal in some form or another. We also do a bit of compounding with some local barley and sell it to local farmers.

97. Chairman.—Your company sells it all, and does not have a marketing problem?

Mr. Roche.—On occasions we have a carry over. In 1977 we had a carry over of 1,000 tons. That was a most unusual year. It was a very mild autumn and the industry generally had a fairly tough time. At the moment we are completely out of stock.

98. Chairman.—Does your company do a special horse conditioner?

Mr. Roche.—Yes. We do a special horse conditioner in Gowla also, but that is a very small amount, only about 250 tons.

99. Senator Cooney.—The grass meal is the basic ingredient?

Mr. Roche.—There is grass meal, but there are a lot of other things in it, calcium phosphates and so on. It is a conditioner, an additive rather than a full meal. One would not feed it, on its own, to horses. It would be just a scoopful, say, added to their ordinary diet.

100. Senator Cooney.—Do you fuel your furnaces by oil or turf?

Mr. Roche.—Oil. We have had experience with turf for many years. We started on turf in 1952. We produced turf on one part of a bog and grew grass on the other part. We switched to oil in 1965 and saved between £3,000 and £5,000. Of course oil was cheap in those days. I have seen consultants’ reports on Min Fhéir—they have been supplied to me by the Department of Industry, Commerce and Energy—but it is very difficult to take account of everything; one must take one year with another. Practice varies a lot from theory.

101. Chairman.—What share of the market have you?

Mr. Roche.—The market has dwindled to about 11,000 to 12,000 tons from, at one time, 30,000 tons. We produce about 3,000 tons.

102. Chairman.—Your company does not have as much of a problem about marketing?

Mr. Roche.—Geographically we are better located than Min Fhéir from the point of view of markets—they are located on the west coast. That is very important. They have a great distance to travel before they reach marketable areas. Even in Gowla we are not ideally situated—we still have to travel to market the product. About 60 per cent of the compounders are in Munster and Leinster, and the private producers in Munster and Leinster would have anything from £3 to £4 a ton advantage from Gowla, maybe more in delivery costs alone, by comparison with Min Fhéir.

103. Chairman.—Do you think Min Fhéir’s product is as good as yours?

Mr. Roche.—Pretty well much the same. There can be a tremendous difference in grass meal. The younger you cut grass, the higher the protein and the carotene. Then if you try to get bulk on a 14 to 16 per cent protein product, quality deteriorates as the bulk improves. Then, of course, you must be very careful because if you are substandard, below 14 per cent protein, you are not allowed to sell as grass meal because of Government regulation.

104. Chairman.—Would any problem Min Fhéir might have be attributable to a bad quality product?

Mr. Roche.—I would not think so. There is a problem for anybody producing a thing like that letting it grow too far. The thing is not to let it grow too far before harvesting, to fertilise it properly and to have the willpower to manage. On average, the product then should be marketable.

105. Deputy L. Lawlor.—On the question of rationalising, the co-operation between you is close. I am thinking of the situation of Min Fhéir. They have been getting great assistance from the Sugar Company, without a continuing commitment, and I should like to hear your views on the possible future for Min Fhéir and for your operations at Gowla.

Mr. Roche.—I will be quite blunt about it. The future for grass meal is not rosy. We must look at private interests, how they react to market demand, and to the future of our product. Ten, or even fewer, years ago there were ten producers in Ireland. Today there are five, of which two are State sponsored. The private producers would not have gone out if there had been money in it. There is a reason why there is not money in it. In the old days grass meal carried a premium because it was such a natural contributor to the feeding of pigs and poultry: grass meal is particularly high in qualities like xanthophyll which then were not freely available from other sources. These are now available synthetically at much cheaper prices than what they can be bought for by way of grass meal. Grass meal today is back to the 14 per cent protein plus mineral-vitamin standard of many other feeds, and of course its value then compares with other feeds like maize, soya and things like them. Therefore, grass meal has not a rosy future, as we would see it. As you perhaps know, in Gowla we have had problems since 1975 because Bord na Mona acquired bog all around us. It was said they intended to open up a generating plant at Ballyforan. That seems to have been delayed. At that time they wanted the Gowla bog as part of the entire Bord na Mona enterprise in that area. Their plan was to drain the whole area in one unit. We had more jobs going at Gowla—at the moment we have only approximately 1.500 acres. We had more than 3,200 acres of bog at one time, which was sold to the Forestry Division in 1968. We have had negotiations with Bord na Móna with a view to their acquisition of Gowla—they are very anxious to take it over. We have had discussion with them about all the problems involved, such as labour, the protection of existing jobs— usually there are 42 persons employed at Gowla, many more than Min Fhéir——

106. Chairman.—I do not think we should go into that too deeply: we will be talking to the Sugar Company some other day. From what you have told us, and we have listened carefully to your views, we have learned that there is not a rosy future for the product.

Mr. Roche.—There is not.

107. Chairman.—I gather from what you were beginning to develop that you would not mind if your company were taken out of the business?

Mr. Roche.—No, as a personal view.

The witness withdrew.

*See Appendix 7.

*See Appendix 7.