Farmers unhappy with loan report

Press, Volume CXII, Issue 32879, 30 March 1972, Page 2

Farmers unhappy with loan report

(New Zealand Press Association)

WELLINGTON, March 29.

Federated Fanners is extremely disappointed that the Committee of Inquiry into lending to farmers did not adopt the federation’s submissions for the return of State Advances Corporation interest rates to their pre*l97l Budget levels.

The Dominion president of Federated Farmers (Mr A. C. Begg) said the committee claimed that its recommendation that all loans to farmers should be at market rates of interest would retain the balance of lending funds between non-Govemment and Government sources. “The federation would readily accept this recommendation if all sectors of the New Zealand economy were placed on the same footing with regard to their ability to bid for resources —including finance,” he said. "But most sectors of the economy, with the exception of the export industries, operate in a protected environment,” he said. “They can pass on the increased

costs arising from any bidding up of the market rate of interest in the prices they charge for their goods and se. vices.” Mr Begg said the farming sector had its prices determined on the world markets, and could not do this. The committee had noted that the lack of profitability in the fanning industry was a major cause of the farmers’ financial problems, rather than the availability of loan money. The federation would agree with this. “But, having noted the major problem, the committee still recommends that fanning should pay market rates of interest, which will certainly not correct the lack of profitability in farming. Mr Begg said the federation was pleased that the committee had adopted many of the submissions made by the federation. These included:— The transfer of the Marginal Loans Board functions to the State Advances Corporation, but with the retention of the local committee system for marginal loan applications. The placing of finance for farm purchase, with the emphasis on assisting young men on to the land as the top priority for Government loan resources. Encouragement for the establishment of a mortgage market The continuation of the rural housing scheme. Encouragement for the trading banks to channel additional funds for lending on short-term loans, to obviate the r need for farmers to use hire-purchase finance. “The federation submitted that S.A.C. loan limits be removed for stock loans, and substantially increased for purchase loans,” said Mr “We welcome the committee’s recommendation that the loan limits be re-

moved, to give flexibility. The S.A.C. loans committee would be able to treat each case on its merits by balancing the aim of financing as many borrowers as possible against the need to ensure that each borrower is adequately financed,” said Mr Begg.