RURAL CREDITS.

Auckland Star, Volume LXIV, Issue 290, 8 December 1933, Page 12

RURAL CREDITS.

DIFFICULT YEAR.

ASSISTANCE FOR FARMERS.

ti SURVIVED SEVERE TEST." "It is generally recognised that the yea.r just closed has been one of unparalleled difficulty, for all lenders on rural securities, and the difficulties have been felt with, special force by those companies and institutions ' which have been engaged in lending fluids on the security of stock and chattels, a class of lending which, even in normal times, is fraught with special dangers," states the report of the Rural Intermediate Credit Board for the year ended June 30. -

The difficulties occasioned by the severe decline in farming revenue, which upset all calculations and made it impossible for fanners to • meet obligations which they had incurred in good faith and with every prospect of meeting them, were increased, states the report, by the operation' of the mortgagors' relief legislation, which imposed serious restrictions on the mortgagee's right to realise his securities. The board had endeavoured to make the best of the position as it existed, and in a number of cases it had entered into equitable arrangements for the sharing of farming income with the mortgagee of the land after providing for necessary living and working expenses for the mortgagors and the payment of rates and taxes. In the case of association loans the policy to be adopted in such cases had been left primarily to the directors to determine, as the responsibility for any loss involved in carrying on mortgagors whose financial _ position is weak foil on the associations.

That in a period of such outstanding difficulty the board and the associations had avoided serious losses and had succeeded in restricting the amount of interest outstanding to the moderate sum of £600 spoke well for the care displayed by all connected with the administration of tho system, and for the desire of borrowers to meet their obligations to the fullest extent of their capacity.

On Sound Lines. The board looks forward with confidence to a resumption of lending on a more extensive scale as soon as conditions in the farming industry become more stable. Proof that the system was devised and established on sound lines is afforded by the fact that it has successfully survived the severe testimposed by the unfavourable conditions which have prevailed almost since its inception, and with the return of more prosperous conditions there should be scope for a considerable expansion of its operations." Farmers had again experienced difficulty in meeting their obligations owing to the decline in the prices of all classes of primary produce. In the past year the conditions were accentuated, especially in the case of dairy farmers. Most dairy farmers had based their expenditure for the year on an anticipated return over the whole season of at least 1/ per pound for butterfat, whereas the return actually received was generally between 9d and lOd per pound. The position of sheep farmers had been equally unsatisfactory, and loans had required close supervision and control. It was gratifying to report that in the face of the existing conditions the majority of the borrowers had made their payments satisfactorily and that the concessions granted had related almost exclusively to the principal repayments, the amount of interest outstanding at June 30 being only £600.

Interest Kates Reduced. Tn response to the Government's expressed wish for a general reduction of interest rates and with the object of assisting borrowers, the board had reduced the rate of interest charged by it on all classes of loans. Hitherto the rate payable by farmers on all loans, whether made direct or through associations or under the discounting system* had been 6i per cent, the board lendjng to associations at 6 per cent to enable them to obtain a profit interest of h per cent with which to meet their working expenses. From May 1, 1033, the rate of interest charged to farmers had been reduced by i per cent to 6 per cent, the rate payable to the board by associations being correspondingly reduced to 5* per cent. The reduction involved a fiTianpia.i sacrifice on the part of the board.