£60 Million Advanced

Press, Volume CV, Issue 31061, 17 May 1966, Page 3

£60 Million Advanced

(N.Z. Press Association) WELLINGTON, May 16. There seemed to be a great deal of misunderstanding among farmers and others about the availability of credit from stock firms, the president of the Stock and Station Agents’ Association, Mr L. A. Sisam, said today. “To assist the farmers finance increased production, the stock firms have made available to them over the last two years an additional £2O million, bringing the total advances to the farming community by stock firms to an all-time high figure of about £6O million,” he said.

“The present situation has been brought about by the magnificent response of the farming • community to the Government’s appeal for increased production and the resultant increase in flocks and herds.

“A large proportion of the amount advanced is ‘hardcore’ debt, which cannot be repaid out of revenue within a reasonable period.

“The stock and station companies have never been geared to provide long-term finance for the farming community, and their traditional role has been to make available seasonal advances against seasonal revenue, these seasonal advances being granted against the asset backing of the capital stock and the equity in the property. “Mainly as a result of the advances for this ‘hard-core’ debt, the stock and station industry’s financial resources have been strained, and in order to preserve liquidity it has been found necessary to: “(A) Exert tighter supervision over advances and credit, “(B) Confine future advances

to seasonal requirements, “(C) Avoid the building up of further ‘hard-core’ debts arising from the purchase of property, stock, etc., and/or long-term development work. “(D) Request farmers to refinance with those institutions geared to provide long-term finance part of their hard-core indebtedness to stock firms. “(E) Enforce strict adherence to conditions of sale under which livestock, etc., are sold. “We wish to assure the farming community that the stock firms will, to the extent of their available finance, carry on their traditional role of providing seasonal finance for the man on the land.

“To enable us to do this we seek the co-operation of farmers and request them not to enter into any commitments until they have first arranged the necessary finance.”

Referring to the shortage of short-term finance for farmers, the Director-General of Agriculture (Mr D. W. R. Webb) told Southland Federated Farmers today that he hoped the Agricultural Production Council’s action in getting the problem under scrutiny by the country’s financial authorities would provide the immediate solution.

“But remember, that the targets commitee of the conference estimated that the additional capital that would be required to achieve the 1972 target of 111 million ewe equivalents was from £3OO million to £5OO million.”