TO DETERMINE ATTITUDE TO CREDIT

Press, Issue 32345, 10 July 1970, Page 10

TO DETERMINE ATTITUDE TO CREDIT

Interviewing will start soon in the Oxford county as a first step in one of the most ambitious surveys to be undertaken by Lincoln College.

The Farmer Attitude ( Credit Survey is jointly t directed by Professor B. P. < Philpott, professor of agri- t ultural economics, and Pro- f fessor J. D. Stewart, professor of farm management at s the college. t The detailed supervision t and organisation of the sur- t vey, which is intended ulti- I mately to cover all farming t areas of New Zealand, is in v the hands of Mr R. J. Stan- c bridge, a British Common- 1 wealth Scholar who has i recently arrived in New c Zealand after working on similar surveys in England, c Students at the college, i who have had extensive t farming experience, coupled f with academic training, are c being selected and trained i as interviewers to go out 1 into the field and talk to a farmers. v The survey has the sup- d port of many of the more prominent financial institutions that serve the farmers’ credit requirements, as well as, in the Oxford county, the more local support of North Canterbury Federated Farmers. As its name suggests, the survey is concerned with determining the farmer’s Si attitude towards credit, the tl use he makes of available f. credit facilities and his s | suggestions for improve- „ ments in credit facilities a that would enable him to a run his business more effici- v ently, says a statement on the survey prepared by Mr t! Stanbridge. t]

At present the farmer’s business and therefore his liquidity is being hard hit by falling prices, particularly for wool and dairy products, and the adverse weather in recent months in many areas of New Zealand. Yet at the same time the farmer is being urged to increase farming intensity to attempt to meet the production goals set by the Agricultural Development

Conference, and to exploit the new, possibly vast, export markets that appear to be opening up, at least for some farm commodities. These facts all lead to the same conclusion that the unimpeded flow of credit to the farm sector is vital for the whole economy’s future. It is one of the purposes of the survey to determine whether this is in fact the case, or whether farms feel hampered by inadequate and inefficient supplies and flows of credit. The need for information of this sort is obvious, for it is only by collection of the credit experiences of farmers throughout the country that the financial institutions can be made to look again at themselves and the services they provide for farmers, and have done for many years. A second aim of the survey is to determine the extent to which the financial institutions have built up a harmonious two-way communication channel between themselves and their farmer clients, says Mr Stanbridge. The onus of establishing satisfactory relations with the farmer must be placed fairly and squarely on the shoulders of the lending institutions, as it is they, and not the farmer, who are offering financial services. Many institutions, It is true, have gone to great trouble and effort in de-

s veloping a high level of ! s trust and confidence between themselves and their farmer clients. e Yet other institutions, by is their high-handedness, their j. lack of interest in the wele fare of the farmer and his d problems, and their inexi- cusable lack of basic agrie cultural knowledge have e aroused the suspicions and it mistrust of the farming com-

munity towards the institutions and towards borrowing. To the extent that these feelings prevail, the maximum rate of development of the farm sector is being held back. It is important to. discover these very real feelings of some farmers in an objective manner, in the hope that the institutions may make renewed efforts to obtain the complete trust of the whole farming community, and help the community to attain its full production and income potential. From the financial Institutions’ point of view, it would be particularly useful to have an estimate of future likely credit requirements of farmers. Such an estimate'is likely t-> be even more valuable after concessions made to farmers in the recent Budget and the increased cash made available by the Government to the State Advances Corporation and Marginal Lands Board for lending to farmers.

To attempt to make this estimate is the third major aim of this survey. If the institutions were to have better estimates of farmers’ future plans and likely borrowing needs than at present, then, they argue, they could make greater efforts to make the necessary finance available, thus causing less bitter feeling and hardship amongst disappointed farmers. The survey is to cover all farming areas in New Zealand and about 400 interviews will be carried out during November and December. A series of interviews in Canterbury, starting with the Oxford county, will be done before this date. Analysis of data will be carried out on the college’s computer, thus ensuring complete anonymity of response. Taking results from the country as a whole, it is hoped that this survey, together with collected published statistical information, will go a long way to building a complete picture of all the “demand” aspects of the farm credit market.

To supplement the farmer survey, a second survey will be made by Mr Stanbridge alone. This will be a survey of the credit-supplying institutions themselves and will include contact with the trading banks, insurance companies, stock and station agents and the Government lending institutions, such as the State Advances Corporation and the Marginal Land Board. Information will be collected on all aspects of the supply of credit to farmers. The factors affecting the supply will be analysed, with special emphasis on factors such as Government regulations and controls that may go to check or limit the otherwise smooth flow of funds to farmers. Information will be collected on the criteria used by these institutions to allocate credit to the farming sector, rather than to other sectors of the economy, and criteria used by the institutions to choose to lend to one farmer rather than another. Information will be collected on the farming knowledge of those in the

institutions whose task it is to deal with and vet applications for funds by farmers. The institutions will be presented with the criticisms of farmers that will have arisen from the farmer survey, and asked to comment on the farmers’ suggestions for improvements in their services. The institutions themselves may be strongly considering offering better and more varied and flexible services, for] which they are not yet sure I of the demand. By using this information obtained from the' farming survey, it is hoped; to educate the credit-supply-| ing institutions to know: something more of the! farmer’s position, his atti-i tudes and his needs. Information obtained from the farmer survey, together with the supplementary survey of institutions, should go far to explain and describe in a quantitative and qualitative manner, the workings of the. New Zealand farm credit market. The survey results should add greatly to the general background knowledge of the credit-

supplying institutions in their dealings with farmers, both at present and in the immediate years to come. In this way it is hoped that they can offer a greater variety and volume of credit services to farmers: and appreciate the farmer as an individual and; businessman to a greater extent than at present. Thus, the farmers stand to benefit, the financial institutions will benefit,

and ultimately the whole economy will reap the rewards of a higher level of understanding and cooperation between these two vital sectors of the economy.