The Press MONDAY, DECEMBER 5, 1966. Finance For Farm Development

Press, Volume CVI, Issue 31234, 5 December 1966, Page 16

The Press MONDAY, DECEMBER 5, 1966. Finance For Farm Development

The North Canterbury Agricultural Advisory Committee is understandably concerned lest the drive for increased production should be frustrated by lack of finance. Sheep numbers increased 7 per cent last year; and it is tempting to assume that farmers obtained all the money they needed to finance this expansion, that existing sources of finance are adequate, and that sheep numbers will continue to increase in the future. Much evidence suggests that the truth is far different.

A 7 per cent increase in a flock of 2000 amounts to 140 sheep. Many farms of this size have comfortably accommodated an extra 140 sheep in the 1965-66 season, which was exceptionally favourable for farming. Some of these farms could, no doubt, carry an extra 159 sheep—7 per cent of 2140—in 1966-67, given another favourable production season. But soon this steady progression must come to an end unless it is accompanied by extra applications of fertiliser and seeds, more fencing, extensions to sheep yards and wool sheds, the provision of more tractors and housing for staff. The longer this capital outlay is delayed the larger the arrears will be. The meagre statistics available suggest that farm investment is already lagging behind livestock numbers.

The Agricultural Development Conference appointed a sub-committee to estimate the costs of capital development needed to sustain an annual increase of per cent in livestock numbers. The sub-committee calculated that it would cost about £lO for each additional “ewe equivalent”, rating other sheep at 0.8 ewe equivalents, dairy cows in milk at 7 ewe equivalents, and so on. The increase in livestock numbers in the last four years has been 10.6 million ewe equivalents (less than 3.2 per cent per annum); so £lO6 million should have been invested in capital development in that period. But rural mortgages, which accounted for more than 70 per cent of all farm debt three years ago, have increased by only £155 million in the last four years. Rural transfers totalling £273 million took place in that time, and mortgage finance of considerably more than £lOO million must have been required by the incoming purchasers. Probably less than £5O million of the net increase in mortgage debt was available to finance capital development on farms in the last four years.

The deficiency in capital investment must be made good soon if the conference target of 111 million ewe equivalents by 1972-73 is to be reached. Mortgage money will need to be diverted from other avenues, such as urban building, into financing the expansion of farming. Already it is more difficult for city-dwellers to borrow money for housing, for building shops, offices, and factories, and for other forms of business expansion; loans for these purposes may have to be reduced still further. Builders and other contractors will find more work in the country and less in the cities if mortgage money is switched in that direction.

Ultimately, most of the important decisions ensuring the success of the farm development project will be taken by the Government —such as an instruction to the State Advances Corporation to divert so many million pounds in the next year from urban to rural lending. Another source of capital over which the Government has some control is the price of farm land. As land prices rise, so does the amount of mortgage money required by new entrants to farming. If the sole effect of increasing State Advances Corporation lending on farms is to raise the price of farm land, no extra money is available for development. Conversely, a fall in the price of farm land frees more mortgage money for development. Politically, the decisions required of the Government in this field are difficult; economically, they are vital.

The Door Slammed Again The most disturbing aspect of the United Nations vote on admitting Communist China is that old tactics were used once more, on an American initiative, to thwart the proposal. Reliance on a procedural technicality to postpone the inevitable must strengthen the impression that the United Nations is becoming more and more an arena for the ploy of politics. Last year Britain supported a proposal that would have substituted Peking for Taipeh in the seating of a Chinese delegation, but voted also for the “ important “ issue ” motion, requiring a two-thirds majority for any decision to admit Communist China. It was known that Peking’s supporters could muster no such majority. The same result has been achieved this year, by the same means. The “important issue” vote prevented consideration of two constructive proposals. The first, advanced by Canada, envisaged the seating of both Chinas in the General Assembly, Peking replacing Taipeh on the Security Council. It would also have required the Secretary-General, U Thant, to seek discussions with both Chinas in the hope of finding an agreed formula. The second proposal, made by Italy, sought the appointment of a special committee to study and report on the problem of Chinese representation. Mr Holyoake described this as “ sensible and practical ”, but added that New Zealand could not support any plan “which would “ deny the people of Formosa a continuing voice in “ the world organisation ”.

The only equitable solution is surely the seating of both Chinas as separate entities—which is what they are and are likely to remain. Peking, however, has said it would not join—except on quite extravagant terms—even if asked, and would not share membership with Taipeh. In Formosa, objections to making any concessions to Peking are just as stubbornly rooted. About a quarter of the world’s people are still barred from the United Nations; and attempts to resolve the deadlock are again indefinitely deferred. In the light of the power struggle within mainland China and between the two Chinas, this can only be regarded as dangerously illogical.