Farmers’ interests squeezed

Press, 1 June 1984, Page 20

Farmers’ interests squeezed

The Prime Minister’s interest rate policies had diverted both money and confidence away from agriculture to the share market and non-productive sectors, the president of the North Canterbury Federated Farmers, Mr F. A. Bull, said this week.

“Of particular concern has been the almost total withdrawal of the private lenders who previously supplied a very large proportion of the rural market,” Mr Bull told his federation’s annual conference. While Government guarantee stock remained on the market at 10.75 per cent, there was very little incentive for any investor to take a punt at 11 per cent on agriculture with its present problems, said Mr Bull. Agriculture was still the mainstay of New Zealand’s economy, but it was near breaking point with many farmers literally balanced on a knife edge. Mr Bull said he appreciated the fact that, having created a massive deficit,

the Prime Minister had the problem of funding it. To achieve this, Mr Bull said he assumed the Prime Minister had to continually outbid the private sector for money.

“We will therefore study very carefully the level of Government spending in the Budget,” said Mr Bull. Although the regulated interest rates of 11 and 14 per cent for first and second mortgages had benefited some people, they had not helped many in the farming sector, said Mr Bull. The rural money market was devoid of both money and confidence, while interest on existing loans remained at the previous high rates. Farmers were being placed in embarrassing and frustrating positions because they could not refinance within the criteria laid down in the regulations. However, Mr Bull said, if all borrowed money was at the Prime Minister’s suggested rates, there would be a dramatic reduction in farmers’ standing charges.

New Zealand farmers had always been renowned worldwide for efficiency and enterprise, but recent financial policies had departed so far from that philosophy that the farmer of today could hardly be blamed for becoming cynical and disillusioned. Farmers had been coaxed along with “carrot dangling, sticking-plaster” type policies which had not cured the problems and‘had usually been detrimental to farmers.

S.M.P.S had distorted market signals and the relative values of sheep compared with other options open to the farmer, said Mr Bull. The Income Tax Amendment Bill No. 2, a negative and socialistic piece of legislation, had restricted investment and movement into areas which had been profitable for both farmers and the nation.

New Zealand’s agricultural industry today was a classic example how selective, piece-meal government policy could distort and re-

strict normal healthy growth, he said. Mr Bull congratulated the Government for bringing inflation under control, and condemned the industrial action by trade unions. If the biggest troublemakers were the lower-paid groups, then it might be more understandable, said Mr Bull. But oil refinery and freezing workers were hardly in that category and their senseless disruption was only adding unwarranted costs which neither the industry or country could afford.