Thursday, 1 February 1990
Dáil Éireann Debate
Mr. Connaughton: I should like to  thank you, a Cheann Comhairle, for allowing me to raise this matter which is of prime concern to the agricultural industry, to the bacon and pork industry and particularly for our export markets. I know this has caused devastation in the Ballybay area — I was in that general area last week — certainly to the 175 people who lost their jobs as well as the farmers who are owed in excess of £2 million for their pigs. The whole thing is a very sorry story.
However, it is incumbent on somebody like me to ensure that all the facts surrounding this problem are known. In the few minutes at my disposal I should like to ask the Minister for Agriculture and Food to inform the public how the IDA evaluated the Ballybay Meat Exports project for grant-aid purposes and to explain how such a project went into receivership so soon after the evaluation was carried out. I find it difficult to understand how only a year ago the IDA could see fit — and in my view rightly so — to grant-aid the company. In my view the factory was in the right place. How could an evaluation of that type go so terribly wrong? I should like to know if Ballybay Meat Exports Limited, or any other company involving the same directors, got aid from Fóir Teoranta before the new processing plant was built and if the IDA were in receipt of this information. It is very important that those points be clarified. Is it true that over £3 million of FEOGA grant-aid and IDA funds were involved and what opportunities or mechanisms are available to the IDA to recover taxpayers' money?
I understand from the media that the Minister initiated an investigation a few weeks ago. I should like to know the terms of reference of such an investigation and if the results will be made public. I should like to know who is being investigated and by whom. Is the investigation being carried out by the Department of Agriculture and Food, the Garda or the Fraud Squad? Is the Minister worried by the consistent newspaper reports  about ongoing investigations by Danish and US police about the mislabelling of consignments of pork on the US markets? Such rumours are extremely dangerous and serious for Irish bacon and pork products on all our export markets. Have such investigations taken place in Ballybay Meat Exports Limited or, indeed, in any other Irish meat processing factory? If those reports are wrong it is incumbent on the Minister to say so immediately before we do serious harm to the export drive in the continental countries and particularly in America. It is time to cut this out if it is wrong; if it is right it is another story.
Newspaper reports indicate that the company in Ballybay had debts of £7 million. If these reports are true where did the money go? Will farmers who are owed £2 million receive preferential treatment? Was Ballybay Meat Exports Limited connected in any way with any London meat export company or trading house or have the Danish company who are involved with Ballybay Meat any business connections in London? Would the Minister agree that it is now past the time when all the matters relating to the above should be addressed in a full and frank public discussion and that the results should be made public immediately. Failure to do so would greatly affect the entire marketing of bacon and pork abroad and would devastate Ballybay and its hinterland and the 175 people who lost their jobs.
I urge the Minister to use his influence with the receiver to ensure that the plant will re-open as a bacon and pork processing factory and that the jobs will be protected. A pre-condition of opening must be to pay farmers for their stock.
This is a very serious matter and it behoves everybody involved to clarify immediately what exactly is going on. If the reports are incorrect then obviously this processing factory at Ballybay should not have closed. It has very serious ramifications across the entire industry. I am asking the Minister to clarify to the best  of his ability the questions I have asked today.
Minister of State at the Department of Agriculture and Food (Mr. Kirk): I am glad to have the opportunity to reply to this question relating to Ballybay Meat Exports Limited put down by Deputy Connaughton.
I would like to put the position at Ballybay into perspective. It is generally acknowledged that the pigmeat industry is in urgent need of restructuring to gear it for the increasingly competitive European and world markets in the years ahead.
In July 1987, the Minister for Agriculture and Food, Deputy O'Kennedy, announced a major programme for the development of this very important industry. This programme involves a total capital investment by 1992 of some £140 million, including substantial investment in the processing sectors of the industry. The purpose of the programme is to rationalise and modernise these sectors so as to create an up-to-date and efficient industry comparable to the best in Europe and capable of matching its competitors both at home and abroad. It also has an ambitious job creation target of some 1,000 jobs.
The development strategy involves the creation of up to eight central slaughtering and processing plants, up to the highest EC and US veterinary standards, with a minimum slaughtering capacity of 6,000 pigs per week. The strategy also provides for the establishment of a number of specialised export-orientated processing plants which it is envisaged would source their raw material from the central slaughtering units. The programme is well under way with a number of plants already on stream and some others in the process of construction or at an advanced planning stage. In fact, since June 1987 my Department have approved of investment projects in pig slaughtering and processing facilities involving a total capital input of about £85  million. Of this, the IDA have committed £15 million to these investments while EC grant aid of some £40 million has been sought, of which about £23 million has been approved.
The closure of Ballybay Meat is of course a serious setback, and the Minister, who is particularly concerned that a firm should go into receivership so soon after it opened, has asked for a report from his Department and the IDA on certain aspects of the case. Because of the confidential nature of the Department's dealings with individual companies it would be inappropriate to comment further in public on this particular aspect of the matter.
Mr. Kirk: Investment aid to private companies is normally made by State agencies such as the IDA or SFADCo. Each agency undertakes a critical examination of grant applications and all relevant matters including the financial structure and management expertise of the company are taken into account. It is only after such screening and following the approval of a grant by the State agency concerned, that the application for EC funding is submitted by the Department to Brussels. Payment of the EC grant is made on the basis of a duly audited claim checked and certified by the relevant State grant agency. Thus, in the case of Ballybay Meat the EC grant was paid only after the building had been completed and the equipment installed.
I can confirm that the IDA examined and evaluated the project in great detail prior to grant approval and satisfied themselves as to the commercial viability of the venture at the time. The IDA were always aware of the tight financial position of Ballybay Meat going back to their start up period in 1981. This situation is not unusual as the financial needs  of food companies both in terms of working capital and fixed assets are sizeable particularly those engaged in establishing a new venture. The IDA approved their first grant package to Ballybay Meat in 1981 for their original facility at Corbrack.
In 1985 due to the expanding trading needs of the company and with a view to putting their funding on a more secure basis, additional sources of finance were sought and Fóir Teoranta provided funding to the company. This initiative was seen as beneficial by all parties concerned with the company including their bankers, IDA and, subsequently, their new investors, ESS Foods.
In 1987, in considering the most recent proposal from Ballybay the IDA were aware, among others, of the Fóir Teoranta participation in the venture. This increment of investment was progressed with the involvement of ESS Foods who represented a significant additional initiative in the development of the Ballybay enterprise.
The closure of Ballybay is, as I said, very regrettable and one's sympathies must certainly go out to the estimated 180 people who have lost their jobs. I am also concerned about the pig producers who are owed a great deal of money by the company. However, I would be very hopeful of positive developments regarding the future of the Ballybay plant. This plant is in excellent condition and one of the most modern in the business. The FEOGA and State moneys involved were used to build a substantial asset. I understand that the receiver has advertised the plant for sale by tender. I would be very anxious that a buyer be found and in co-operation with all concerned would recommence operations at the plant as soon as possible.
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