FARMERS' DEBTS.

Auckland Star, Volume LXVI, Issue 29, 4 February 1935, Page 5

FARMERS' DEBTS.

EXTENT OF PROBLEM. WHAT COMMISSION FOUND. lOANS IN ARREARS. (By Telegraph.—Own Correspondent.) • WELLINGTON, this day. "It is likely that at least 50 per cent of the dairy farmers of the Dominion are, in varying degree, unable at the present time to meet their financial commitments." This was the first conclusion prominently stated by the Royal Commission on the dairying industry, whose report led to emergency legislation last Session, and considerably stimulated the move-1 ment for comprehensive legislation! regarding mortgages, which will be the main feature of tlie coming meeting of Parliament. The Dairy Commission did not consider its order of reference justified it in going outside the one farming industry in its investigation of the debt problem, but that this is extensive enough in connection with dairy farmers ■was vividly pictured in the long report, all of which could not be published in the Press at the time, for there was other important features which had to receive | consideration, and much space. For this) reason it is worth while, as throwing light on the magnitude of the task which Parliament is about to face, to reproduce some of the commission's findings of fact relating to the debts of dairy farmers,! and their capacity to pav. j Lands Department's Settlers. I It was found that nearly 50 per cent] of the 11,974 ten; nts and/or mortgagors of the Lands Departnie; ' were in arrear on March 31 last in respect to rent, )■ '-'mciit principal and interest. The Department had met its debtors liberally up to that date, for it had written off approximated one-seventh of the arrears of interest and rent accruing for the financial year 1033-34. E':t this left a total of unpaid debts amounting to £591,574.

State Advances Mortgagors.

This State lending Department is concerned with dairy farmers to the extent of over £11,000,000 of mortgages. Having ho power to write off, it "d been postponing arrears of principal repayments, and capitalising interest arrears. The commission found that of 10,222 dairy farmer mortgagors, 200.3, or over 25 per cent, were in arrears to the Department, the aggregate amount being £,382,440. A significant fact showing that realisations for dairy produce at the time of the investigations were quite inadequate to enable fanning to meet bare costs was that whilst the number of mortgagors in arrear had increased by only 1.5 per cent during the year, the aggregate amount of arrears went up in the same period by 21.9 per cent. Public Trust's Experience. The opinion of the commission was that the Public Trust Office was not comparable with other State lending institutions because it required a larger margin of security. In actual practice, advances were only made to 50 per cent of the valuation made by the Valuation Department, and frequently checked by other valuers. Consequently, of the 1493 dairy farms mortgaged to the office, 74 per cent of the mortgagors had met their mortgage interest in full, while 20 per cent were in arrear to some extent. It was regarded as of special importance by the commiesion as indicating the serious position of dairy farmers that Waikato securities in this office are mortgages to the extent of £13 per acre only and are under close supervision. "Yet," added this authority, "22.5 per cent of these mortgagors are to some extent in arrear with interest. Of 013 mortgages held over dairy farms in the berst dairying districts of New Zealand, 23 per cent are in arrear to some extent, and 9.S per cent of such loans are ill arrear to the extent of more than one-half year's interest." The commission's important proposals for dealing with the rural mortgage position substantially follow the principles enunciated by the Minister of Finance in respect to the Mortgage Bond Corporation though they were framed prior to the.Budget statement.