Rise of Protectionism
The late 1920s and early 1930s saw a rise in protectionism in Europe. One of the key questions in the early years of the Irish Free State was whether, and to what extent to embark on a program of tariff protection. A fiscal enquiry committee that reported in 1923 came down firmly in favour of free trade. The first British Labour Government which was committed to free trade took office in 1924.
Various interests demanded tariffs to protect against a fall in agricultural prices. It was claimed that agricultural produce was being dumped on the Irish market. In 1924 the government promised to introduce limited protection on some items.
The Tariffs Commission considered applications for tariffs on an inter Departmental basis. The first pressure for tariffs came from the grain-growing lobby. They sought to increase the incentive for growing cereal crops, on the basis of the introduction of tariffs on imports.
A statutory tariff committee was established in 1926 under the authority of the Department of Finance. Applications for tariffs were made by the industry concerned.
By 1930 the protectionist lobby in agriculture was becoming more vocal due to the international recession and the fall in agricultural prices. The Tariff Commission recommended the introduction of tariffs on a range of agricultural products such as butter, oats, bacon and linen.
The 1930s were calamitous years for agriculture and many other industries worldwide. Cattle prices fell by over 50 percent. Farms and livestock were subject to forced sales in order to satisfy debts. Arrears of agricultural rates and ACC loans rose. Britain introduced protection for farmers again in 1931 after almost 90 years of free trade. Irish exports fell by 10 percent.
In 1932, Fianna Fáil came to power with a commitment to self-sufficiency in agriculture and industries. Tariffs and quotas were introduced in a wide range of manufactured goods including agricultural, machinery and equipment. Heavy duties were placed on imported butter, bacon and on many other items. Farmers were encouraged to concentrate on the domestic market.
Agriculture had worked on a free-trade basis for almost a century, except during price controls in World War I. From the 1930s, the market for agricultural products was regulated by price controls and other mechanisms. The emphasis of public policy switched from marketing, advice and education to price stabilisation, compensation payments and subsidies.
The Agricultural Wages Act re-established agricultural wages boards that had lapsed on independence. The country was divided into five regions with local committees responsible for determining the wage rates.
Most representatives were nominees of the County Committees of agriculture. Many of the new schemes were operated by the county committees of agriculture. They were also involved in schemes for unemployment relief works and grants for rebuilding creameries.
The Fianna Fáil government suspended the payment of land annuities owed to Britain under the Land Purchase Acts. Retaliation duties of 20 and later of 40 percent were imposed on most imports from Ireland. This included animals, cream, butter, pork, poultry, game and other meat.
The volume of exports to Britain decreased substantially. To some extent, the fall in annuities lessened the effect of the reduced exports and fall in cattle prices. Many farmers who had previously been economic became uneconomic.
The Agricultural Products (Regulation of Export) Act 1933 gave the Minister for Agriculture the power to regulate and control the export of agricultural products covered by British emergency duties. This was extended in 1935 to cover all exports. It facilitated the government in negotiating bilateral trade agreements.
British cattle prices continued to fall through 1933 despite penal duties on imports from Ireland. After 1934, Irish cattle exports to Britain required a licence from the British government. The Department of Agriculture allocated the licences based on previous demand patterns. By 1934 only one licence was available for every seven cattle ready for market.
The introduction of employment and unemployment assistance in 1933 assisted the living standards of small farmers and assisting relatives. The schemes for unemployment and home assistance was introduced in 1934 as a temporary measure.
Beef and Mutton
Under the Slaughter of Sheep and Cattle Act, the Department set a minimum price for bullocks, heifers and sheep. All slaughterhouses and butcheries had to be registered. A levy was imposed on each animal slaughtered.
The Department reimbursed butchers for the value of meat supplied to social welfare recipients. Irish farmers received subsidies on the t price for cattle and sheep. The minimum price orders were lifted in the Spring of 1935 on the advice of the Consultative Council on livestock.
The Department paid subsidies to farmers for canned meat or disposal stock. Older animals which had no value were slaughtered.
Until 1930s, the price of butter was determined by market forces. Britain introduced protectionism in 1931. The next year, the Irish government imposed a levy on all butter produced by creameries and factories, using the money to subsidise exports. The exchequer subsidy was increased to compensate exporters for additional duties imposed by the British government.
Imports of milk, cream, cheese and almost all manufactured dairy produced other than dried milk was banned. The consumption of milk and dairy products in Ireland was encouraged. By the mid-1930s, substantial monies were paid on subsidies for dairy produce. Irish farmers received 15 percent more than the market price for milk. The Dairy Produce Stabilisation Act was due to expire in 1935 but this was continued by the Dairy Produce Act 1935.
In 1936, the import duty on Irish cattle was reduced in a Coal-Cattle Pact. The cost of dairy subsidies fell considerably as the gap between Irish prices and world prices narrowed.
Pigs and Bacon
The 1935 Pigs and Bacon Act established two marketing boards. The Bacon Marketing Board and the Pigs Marketing Board. They were responsible for breeding pigs. They fixed prices and allocated the British export quotas to factories. This was necessary because of the imposition of quotas on bacon and pig meat in 1933.
The marketing boards were authorised to set export quotas for all the market. In 1939 the boards merged to form The Pigs and Bacon Board which became The Pig and Bacon Commission.
The promotion of tillage was advocated widely in the 1920s and 1930s. However, the governments resisted compulsory tillage. The Agricultural Produce (Cereals) Act 1933 provided that the Department of Industry and Commerce would be responsible for the legislation concerning flour mills and the Department of Agriculture responsible for the measures relating to wheat and other cereals.
It provided for payment of wheat bounty. Farmers had to register as wheat growers. The Department of Agriculture appointed tillage instructors in certain bounties. A quota of Irish grown wheat was required to be used by flour millers, although it was relatively small.
The Agricultural Product (Cereals) Act 1935 gave the Department of Agriculture the power to require them to store a specified quantity of wheat. They were given the authority to buy or sell homegrown and imported wheat and effectively fix the price of wheat two years in advance.
The effect was a sharp rise in the percentage of flour produced from native wheat from 5 to 15 and ultimately to 26 percent in 1938. By 1938, the acreage under wheat was 255,000 acres, 12 times that in 1932.
Efforts were also made to increase the acreage under Oats and Barley. The Cereals Act 1936 provided for licensing of produces and set quotas for maize meal.
The State now influenced the location of flour and provender mills. It required a quota for native grain. It set the price creameries received for butter. Price subsidies for agricultural products became an important category of government expenditure.
A company was established to acquire the existing Carlow sugar factory and construct four factories, each with a capacity of 20,000 tonnes of Sugar Beet. Government guarantees were given for debentures issued by the company.
Industrial alcohol plans were established in areas where it was not possible to grow sugar beet. It was hoped they would grow and purchase up to 400,000 tonnes of potatoes.
The Tobacco act 1934 provided for measures to promote the growing of tobacco. Manufacturers were required to buy a quantity of Irish tobacco at a similar price to that paid for imported tobacco. Governments could require the manufacturer to incorporate home-grown tobacco and their blends.
End of Economic War
The Anglo-Irish Trade Agreement of 1938 ended the economic war. Britain removed special duties introduced in 1932 on livestock, meat, poultry, butter, eggs and cream. By 1938 export bounties were abolished on most other products except dairy exports.
Ireland was afforded Commonwealth preferences denied in 1932. It could export livestock, bacon and pork products to Britain duty-free. However, British and Northern Irish farmers benefited from price guarantees for bacon.