FARM BORROWING Enough Income, Equity But Not Incentive

Press, Volume CIII, Issue 30553, 23 September 1964, Page 18

FARM BORROWING Enough Income, Equity But Not Incentive

(From Our Own Reporter) WELLINGTON, September 22. Many farmers in New Zealand had a sufficient income for their needs and sufficient equity to borrow money for development but they did not have die incentive to do so, said Mr A. R. Low today. Mr Low was introducing the final report of the finance working party to the agricultural development conference today.

He said the rural credit survey undertaken by the Department of Agriculture had shown the average indebtedness of farmers in relation to the capital value of their holdings was about 20 to 25 per cent.

Mr Low said it was hoped the total effect of the recommendations of the conference would be such as to stir such farmers to bring their farm production nearer to capacity. Mr Low said there was no problem with short-term or seasonal finance, and this would remain a number one. priority with stock and station firms and banks. “The main concern was with development finance and it seemed not all ’enders were either qualified or willing to lend for this purpose. The great part of such finance would have to come from Government sources. Corporations’ Role Spending for farm development should be a number one priority of the State Advances Corporation and if there was any limit on funds available to the corporation, the restriction should be placed on the funds for property purchase and not for development.

At the same time it was hoped other lending agencies would not restrict their interest in this field.

To encourage a greater participation of private funds in this field he said the party believed a scheme of Government guarantee of mortgage loans to the extent that they were in excess of the normal private lending margins would enable the better use of private investment in agriculture. . Mr Low said the committee was not making any recommendations about special interest rates nor did it think there was any need for a rural bank or a finance corporation. Important Service Advisory services were of the utmost importance, he said, as sound development finance was dependent on sound development. Mr Low said the party had looked at incentive schemes that might be worked out if the momentum of development generated was not great enough. One of these was a suspensory loan scheme which would operate where a farmer carried out a development programme and achieved a certain increase in carrying capacity. Mr Low said the rural credit survey showed that a rather high proportion of mortgage finance was made available to farmers from private people and relatives. Training The establishment of a national farm training scheme was recommended by the manpower working party, according to the Press Association.

The scheme should be administered by the Education Department with a national farm training council and be directed to the young person who took up farm work after leaving school, the committee said. It should provide a person with a means of obtaining systematic and supervised training in farming and a certificate that he had completed his training with reasonable competence. The conference referred the recommendation to Federated Farmers for further investigation. Statistics The resources available to the Department of Agriculture for collecting statistics were probably the smallest of any agricultural country in the world, the conference was told. Presenting a recommendation from the scale of farming working party for the establishment of a bureau of agricultural economics, Dr J. D. Stewart said there was a wed for some farm statistics organisation independent of the services already provided by the producer boards

The chairman of the Meat Board, Sir John Ormond, and Mr W. A. Green, representing the Treasury, expressed doubt about the need for a new organisation. The recommendation was referred to the production committee, which was asked to bring down an amended resolution to the November meeting of the conference.