Committee Reports > List of Committees > Joint > 1980 > Committee on Commercial State-Sponsored Bodies > Report No. 10 - Agricultural Credit Corporation, Limited

APPENDIX 3

LETTER TO CLERK TO JOINT COMMITTEE FROM IRISH CO-OPERATIVE ORGANISATION SOCIETY, LIMITED

I understand that your Committee is at present reviewing the Accounts and operating performance of ACC, and indeed I have read excerpts in the newspapers of the hearing on this subject and the evidence of Mr. Collins, Chairman.

In light of the misleading references to Mr. T. J. Maher and his statements, I would appreciate if you could forward me a copy of the transcript of the hearing.

I would appreciate also if you could arrange for an oral hearing by your Committee of our representatives on this important subject. In support of that request, I submit briefly an outline of our views and plans, which I feel could be developed at that hearing.

The legislation provides for the co-operativisation of the ACC in recognition of the tradition of self-help among organised farmers. ACC executives have on many occasions drawn public attention to this fact and encouraged the Co-operative Movement and Farm Organisations to consider ways and means by which they could become involved in the ownership and control of the ACC.

Every country in Europe, with the exception of the UK and Ireland, has some form of Co-operative Bank and many, notably Greece and France, have a co-operative banking system which combines the State and the farmers. In the early years of this century, this Organisation was actively involved in establishing Village Banks on the Raffeisan model and had very great success with the active financial support of the Department of Agriculture. The withdrawal of this help in the 20’s led to the demise of the chain of over 300 Village Banks and subsequently to the establishment of the ACC in 1927.

Since our accession to the EEC, with the approval of ICOS, ACC have participated in the representative organisation of co-operative Banks in Europe. It is clear that the ACC has an interest in and a capacity to be Ireland’s Co-Operative Bank.

It requires certain changes, however, and certain steps to be taken if it is to evolve. It cannot be done by ACC in isolation. It will require the involvement of ICOS as the coordinating body of the Co-operative Movement and, through them, the involvement of co-operatives and farmers.

But this assumes that it is deemed desirable by the ACC and the Government that the ACC should be co-operativised. If it is not, we would not wish to see ACC continue to represent itself as Ireland’s “intending” co-operative Bank at home or in Europe.

If the co-operativisation of ACC is favoured, as proposed by the Gilmore report in the 50’s, and facilitated by the ACC Act in 1961, and inferred in Ireland and throughout Europe by ACC executives, then certain steps must be taken soon.

ACC has developed a substantial resource-gathering and farm-lending network and expertise. It has a very minor role in Agribusiness lending, accounting for less than 10% of borrowings in that area. It has very little record or expertise in that area.

Because of the strong export orientation of Agribusiness, as a credit market, its needs have changed significantly as a result of our involvement in EMS. Because of the other pressures on the very small domestic money market and the relatively high interest rates that will be a feature of our community for some time to come, it is clear that the funding of the export of Irish food products is a market which will benefit from new funding mechanisms and new expertise.

It is for these reasons that ICOS approached FBD, ACC, Rabobank, and the major co-operatives and got their agreement to participate in the establishment of a Merchant Bank to service the financing of food exports from Ireland with a mix of currencies and new mechanisms as appropriate. All parties agreed in principle to participate but the development of course is subject to approval by the Central Bank.

The intention was that with the involvement of the ACC, there would be no reason to fear any possible conflict of interest, and a mechanism would be established by which the ultimate co-operativisation of the ACC could be undertaken by this organisation or otherwise when and if it was considered appropriate.

Any suggestion that by 1985 or any time, ACC can grow into a Farmer’s Bank is a fallacy.

If the ACC is to change from being a Semi-State body into a Co-operative or Farmers’ Bank, ICOS considers that the best first step would be involvement in the Merchant Bank consortium as proposed.

If the ACC is not to change, then it should not be allowed to misrepresent itself as an “intending co-operative”.

Clarification on this point is vital to the future operation and direction of the ACC and indeed to our future action on the question of banking.

Your Committee affords a timely opportunity and excellent forum for clarification of this point and would be doing a great service to all concerned by establishing clearly whether ACC should or should not, will or will not, be a Co-operative Bank. The suggestion that farmers and co-operatives will be offered the opportunity of equity participation after the Balance Sheet has been brought into line with Central Bank criteria will not resolve this. Nor does it recognise nor accommodate the needs and wishes or plans of the Co-operative Movement or organised farmers.

Yours faithfully

John McCarrick

Director General

20 December 1979