MONEY FOR FARMERS.

Auckland Star, Volume LXI, Issue 262, 5 November 1930, Page 21

MONEY FOR FARMERS.

PROFITABLE DEVELOPMENT POSSIBLE.

LOWERED INTEREST RATE,

(Specially written by SUPER.)

The need for reducing farm production costs was never greater than at the moment, when prices are depressed and when the.future outlook is clouded by uncertainty. In many respects, unfortunately, the farmer .is unable to reduce his costs for he is forced, through our system of protective tariffs, to pay high prices foi\his farm equipment, and in addition to bear heavy labour costs, while still having to accept world parity for his products. In one respect lie has been assisted immeasurably during recent years, this being through the system of rural credit, which has grown rapidly during the last two years, and which gives ev-ery sign of continuing a healthy growth. While the lowering of the interest rate lias been of great practical benefit, it is probable that the greatest advantage of vtho new system has been that' it has given investors renewed confidence in rural securities, has diverted the flow of surplus funds from town to country and has enabled farmers to broaden the scope of their work during a time when money would normally be exceptionally difficult for them to obtain. The writer does not for one moment contend that the present system is perfect, or that if meets every requirement of the farmer. Difficulties '■have already cropped up. Some have been settled and some still require solution. Any criticism of the board's work, however, must necessarily be confined to minor points, for the scheme as a wliolc has worked well. Small Farmers Helped. One of the best features of the rural credit scheme is that it gives as much assistance to the email farmer as to his more wealthy neighbour, and—a most important point—charges him no more for his money, the rate of interest under all sections of the board's Avork being only 0J per cent. It has been criticised for demanding solid security before the granting of a loan, but surely, that must be the baais of its work. In the postwar slump many holders of rural mortgages lost largo sums of money, with the inevitablo result that money was withdrawn from the country and went into enterprises in the cities, or into local body or Government loans. . That was followed by higher interest rates on farm land and chattels and many farmers in a small way who had to borrow small sums to carry through season by season, w«re called upon to pay heavy rates of interest. That was not because lenders or firms were particularly greedy, but simply because it was recognised- that risks were involved and these had to be covered by increased rate of interest. What was wanted was renewed confidence in farm lands, and this had been provided by the Rural Credit Board whoso debentures are looked upon as gilt-edged security. If the policy followed by the board was euch as to endanger that feeling of absolute security on the part of investors, it would simply mean that less money would bo found, and it would bo the farmers themselves who suffered in the long run. A farmer Avith little security to offer but who is the type avlio will eventually succeed, can often obtain a loan from a firm or individual, practically on his standing alone. The board, with its low interest rate and its obvious duty to those Avho have provided it with funds, cannot finance such cases. % , Guarantees and Stud Stock. The three main systems under which the board works are fairly widely knoAvn, and, especially with the association system, the board is given the benefit of close local knoAvledge regarding the circumstances of the different applicants. Criticism has been levelled in some quarters because the board has been unwilling to accept. guarantees from private people in good circumstances, as security against a loan for a small farmer. The board's side of the case is that it is difficult to assess clio value of individual guarantees when they are given, and practically iriipossible to assess their value in five years' time, when final payments will, have to be made on a Ipan. Similarly there have been complaints because, in making a loan to a breeder of pedigree stock, tho board will not allow high valuations. Possibly die attitude adopted here is too consei-va-tive, but it is being subjected to review in the case of dairy stock, arid may be modified. .The board's vieAV here is that valuation costs -would be high as special work Avould be involved, and that it would be unwise to lend a large sum of money on.pedigree stock when everything depended upon the capacity of the farmer to continue along sound lines. That may be so, but where a man has proved his ability to breed the type of stock which are in demand, and where he requires finance,' it does seem that provision should be made for him. Possibly some arrangement Avill be made in future to deal Avith this class of applicant. Overburdened Farmers. Naturally enough, when a neAv system of finance is made available to farmers it attracts attention from some who have been unable to obtain accommodation through the ordinary channels. These men feel that they have a right to obtain loans, even though a stock company would consider their security insufficient, and they have been disappointed when the board has rejected their, application. / " : It is a well-knoAvn fact that many people are to-dav farming land that was bought at too high a price, and that there is being gradually brought about a loAvering of land values. If present prices continue, and if the world readjustment in prices noAV taking place eventually means generally loAvered prices for primary products, land must come down in value, and where farmers are already overburdened Avitli too heavy liabilities, it is impossible for the board to assist them. The writer believes that the board is developing on sound and logical lines, that it has already been- of great service to* farmers in bringing investor 'and borrower into line-at low cost, and that as occasion arises it will be- adapted to suit the widening needs of farmers throughout the Dominion.