Farm guarantees and more lending

Press, Volume CXI, Issue 32630, 11 June 1971, Page 1

Farm guarantees and more lending

A farm mortgage guarantee scheme, more State lending for farming, an increase in fertiliser and lime transport and cost subsidies, including aerial spreading, and a 50 per cent subsidy on the cost of stock drenches are the main benefits for farmers in the Budget.

After referring to their problems of the last two years, Mr Muldoon said that a return to more normal seasonal conditions would help to overcome some of them, but farmers had felt the effects of cost increases and lower export prices.

“Fanning will remain New Zealand’s largest and most important export earner and the Government is committed to maintain its viability of farming in the national interest,” said Mr Muldoon.

“At its meeting last April the National Development Council considered assistance to fanners, and decided that it would be inappropriate to consider long-term decisions until the outcome is known of Britain’s application to join the E.E.C., and that short-term assistance to farming should be selective rather than general. “This view the Government endorses, and believes that a continuation and enlargement of the policy of selective assistance which we have adopted in the past Is the best way to keep fanning efficient and productive. “The Government does not consider that this can be

achieved by massive across-the-board subsidies such as those implied in the Federated Farmers’ cost adjustment scheme. “No Government could justify the use of public funds to help farmers who are not in financial difficulty and I believe that New Zealand farmers as a whole value their independence too much to want to be continually dependent on across-the-board Government assistance.” Farm lending Saying that there had been some concern at the falling off in farm lending by private lenders, and an undue growth of short-term indebtedness,

especially to stock and station agents, Mr Muldoon said that a committee would be set up to make recommendations on farm lending, and on co-ordination between the Government’s lending and farm advisory services.

As soon as administrative machinery had been set up, the State Advances Corporation would provide a mortgage guarantee scheme to draw more private money into farming. The corporation would provide the lender with a guarantee of prompt payment of loan charges, and guarantees would cover the full amount of the loan, within an upper limit related to the value of the security, and would be available for eligible mortgages, including flat mortgages, irrespective of ranking. The lender would pay the corporation a small charge based on the amount lent, and the borrower would pay interest at current market rates for State guaranteed loans. The corporation would advise lenders lacking knowledge of the farming industry. Last year, said Mr Muldoon, rural loans amounting to ss6m had been approved by the corporation, and the Marginal Lands Board. This year, provision would be made for another slom for the corporation, and the board would be allocated more than it lent last year. Under both headings, loans of not more than $30,000 would continue to bear interest at the present rates. Loans above that would pay- present rates up to $30,000, and over that would pay current market rates.

Fertiliser Mr Muldoon announced an increase in the fertiliser transport subsidy for distances over 20 miles. The rate for up to 20 miles would remain at 9c a ton-mile. The new rates would be 7c a tonmile between 20 and 100 miles, and 4c a ton-mile over 100 miles.

A subsidy of $1 a ton would be paid on the aerial spreading of fertiliser and capital lime. • The lime subsidy would be increased to 6c a ton-mile up to 60 miles and 2c a ton-mile for distances above 60 miles. Because fertiliser was an investment, there would be an increase from $5 to $7.50 a ton in the fertiliser subsidy, estimated to cost slsm in a full year. And, said Mr Muldoon, there would be a subsidy of half the ex-factory cost of stock drenches, a major farm budget item. •*