Farm Lending Policy

Press, Volume CIX, Issue 31921, 24 February 1969, Page 22

Farm Lending Policy

(N.Z. Press Association) HAMILTON, Feb. 23. The Government is to be urged to review immediately its policy on fawn lending through the State Advances Corporation to prevent young farmers from having to buy small, uneconomic units or having to leave the land altogether.

According to farm leaders in the Waikato there are many “disappointed young men” unable to raise sufficient finance at reasonable interest rates to buy a farm for which they have worked and saved. The reasons for this are considered to be high land values and low State Advances Corporation loan limits for farm purchase. A meeting of the Waikato provincial executive of Federated Farmers at the week-end resolved to seek clarification of the loan policy and to press, the Government to change its policy. The provincial president, Mr M. G. Hewitt, said that State Advances farm purchase loans had dropped back from s44m in 1967 to s23m. Sound Basis “This makes a reduction of s2lm and this could have been used to good purpose putting agriculture back on a sound basis,” he said. Mr G. Armstrong said the $lO,OOO loan limit had not been altered to meet present prices and this had forced many young farmers into buying small cheap farms that were uneconomic. "This is the reason for a decline in loan applications. The money is nowhere near enough.” Mr Hewitt said that the average increase in production after three years with a State Advances loan was 27 per cent. “No other forms of finance had produced this increase.” Applications Refused The vice-president, Mr G. Gordge, said there was evidence that loan applications were being turned down in considerable numbers. The chairman of the dairy section, Mr J- Kneebone (Matamata), said farmers were most concerned about the situation in his area.

“There are a lot of farmers who want to sell out, but the young men have not the money to buy these farms. “Because of the present loan limits, sellers are being forced to leave money in the properties at high interest rates and short-term periods. “Many young farmers are being forced into alternative finance at unsatisfactory rates and having to take out large amounts of insurance,” he said. Some members argued that higher loan limits would increase land values even

more, but this was not the general opinion. Mr B. Pollock (Cambridge) said he felt there was no use in raising farm-purchase loan limits as the present realisations for farm produce were not enough to service larger debts. “This is a sign of the times,” he said. Mr Hewitt said he would not be happy to see land values decrease as this would lower the farmer’s equity. “The system of finance can have a vital bearing on the cost of the farming enterprise,” he said.