Shortage Of Money For Farm Growth

Press, Volume CV, Issue 31060, 16 May 1966, Page 14

Shortage Of Money For Farm Growth

(By the Aoriculturol Editor of "The Press' ) In a report from Hamilton on Saturday concern was expressed by farming leaders in the Waikato that the drive for increased agriculture production could be halted by the tightening of stock firm credit.

Later this week the acting Dominion president of Federated Farmers (Mr A. C. Begg) and the chairman of a special farm., finance committee of Federated Farmers will discuss this question with the Prime Minister (Mr Holyoake) and the Minister of Finance (Mr Lake).

An ironical aspect of this situation is that the running down of the liquidity of stock and station firms is a direct result of the success of the drive for increased production on the country’s farms initiated by the Government, and in particular by the Minister of Agriculture (Mr Taiboys), who presided over the Agricultural Development Conference and is now chairman of the Agricultural Production Council.

According to a reliable source, by the end of June this year stock numbers on the country’s farms could have increased by about 10m ewe equivalents on figures for I two years ago. Recent figures indicate that by June the number of breeding ewes on farms could have increased from about 35.7 m two years ago to between 39m and 40m, total sheep numbers from just in excess of slm to between 56m and 57m, total cattle numbers from about 6.7 m to between 7.3 m and 7.4 m. Surge In Activity In almost every sphere of agricultural production there has been an impressive surge in activity. In the nine months to the end of March farmers bought 120,000 tons or 9 per cent more superphosphate than in the previous corresponding period, spending in excess of £lm more in this direction. It is also likely that there has been i a big additional investment in machinery used in farming. From July to November last year 3230 mowers were brought into the country compared with 2220 in the same five months of 1964, 1311 pick-up balers compared with 524, 515 crawler tractors

compared with 315, and 3072 wheel tractors compared with 2332. Part of this increase is attributable to the freeing of certain major items from import control, but it is indicative of the growing momentum of activity on New Zealand farms that will ultimately provide a greatly increased volume of goods for export to help maintain the country’s standard of living. Government policies have been deliberately directed to this end. The Agricultural Development Conference and the Agricultural Production Council have created an atmosphere in which farmers cannot fail to be acutely aware that increased agricultural production is needed and that all concerned with farming are genuinely attempting to remove impediments. With its subsidy on fertiliser transport and earlier tax concession where extra fertiliser was used, and in giving taxation concessions for expenditure calculated to lead to increased production, the Government has shown its practical interest in the drive. Doubling It has also been pumping more money into fanning through the State Advances Corporation, and the corporation has been virtually inviting farmers who consider that they are able to increase production to come to consult it. In the last three years its rural authorisations have jumped from £lom to £2om. In the most recent period, of the £2om lent to farmers £B.sin has been for specific farm development or increased production, which is £l.3m more than in the previous year. And just lately a bountiful season has been an ally of all of these efforts.

Everywhere now there is evidence of an impressive build-up in stock numbers on farms with the prospect of greatly increased production from these stock in years to come, but in the meantime farmers have gone without the money they could have raised from the sale of stock they have retained, or have had to find more money to buy extra livestock. To obtain the 31m extra

ewe equivalents that the .Agricultural Development Conference foresaw were needed on the country’s farms by 197273, its finance working party indicated that between £3oom and £soom extra capital would have to be invested in farming. Already it is obvious that much extra capital has gone into farming. It has been suggested that the extra 10m ewe equivalents already added to stock numbers could mean an investment of £lsom, or about £l5 a ewe equivalent, but while this amount of money may indeed be necessary on a long-term basis to support this extra number of stock, at this stage the extra investment already made may not be anything like this. But the point is that a great deal more money is still needed, including some t<x tide fanners over a period when they have expanded their stock numbers and are actually in some measure worse off. Strain On Resources

This has put an obvious strain on existing sources of finance. The stock and station agencies play a major role in financing farmers, and it seems that their activities extend far beyond the role of just providing farmers with seasonal finance. The finance working party of the Agricultural Development Conference said that the proportion of their advances to farmers that came within the definition of development finance was considerable, and might reach 25 per cent of the total in times of reasonable farming prosperity. This represents money that often is not quickly repayable, and reduces the ability of stock and station agencies to meet seasonal finance requirements at times like the present. In the last two years advances by stock and station agencies to farmers have increased by almost 40 per cent. At the end of December, 1963, stock and station agencies’ advances to farmers totalled £42,710,808, of which £24,246,846 was on current account and unsecured, and £18,463,962 was secured. By the end of last year these advances had increased almost to £6om—the actual increase was £16,860,575—and at that time unsecured advances had reached £35,439,211, and secured advances £24,132,172. Banks’ Advances

At the same time in the two years to mid January this year trading banks’ advances to farmers have risen by £10.9m to £41.8m.

It is possible that the position has not been improved by the recent appeal of the British Labour Government to British firms not to increase their investment overseas in Commonwealth countries —this could affect stock and station firms based in the United Kingdom. There have been warnings that this situation was looming. Last November, in his capacity as president of the Canterbury Agricultural and Pastoral Association, Mr G. N. Francis,, who is also connected with the stock and station agency business, said that the development of New Zealand farming to meet pro duetion targets was beyond the capacity of normal lending institutions, and he suggested that there should be some sort of low-interest second mortgage money provided by the State to form the basis of the capital required for growth of agricul tural production. It is unthinkable that at this stage anything should be done to impede the mounting wave of production on the country’s farms. The Government, as the author of the drive for increased agricultural production, could not dare to fail the farmers and the nation in ensuring that a speedy solution is found to this situation.

i Statement Deplored The farm finance situation I was under action, Mr R. H Bedford, president of North I Canterbury Federated Farmers, said yesterday. Mr Bedford, who is also chairman of the North Canterbury District Agricultural Advisory Committee set up under the auspices of the Agricultural Production Council, was commenting on the statement in “The Press’’ on Saturday by Mr M. J. Hewitt, of Waikato, chairman of a special committee on farm finance set up by the Dominion Council of Federated Farmers. Speaking of a tightening n f credit by stock firms, Mr Hewitt said he did not think that the position was desper- I ate, but it was a matter of urgency to assure continued I finance wherever development I projects had been undertaken. Mr Bedford said that, as a member of the special farm finance committee set up by the'Dominion Council of Federated Farmers on May 5- he was appalled that Mr Hewitt, in the capacity of chairman, should make a statement to the press before the deputation led by Mr A. C. acting Dominion president, had been able to see the Prime Minister (Mr Holyoake) and other Ministers. “In the interests of all concerned I have no further comment to make at present, Mr Bedford said.