3 farmers default on bank loans

Press, 12 November 1985, Page 1

3 farmers default on bank loans

Poor management as well as the economic climate has forced three farmers to default on their Rural Bank loans recently. The general manager of the Rural Bank, Mr Ray Chappell, said that the bank had bought three mortgagee sale farms recently to protect its investments in the farms. A small Canterbury horticultural and cropping farm and two Northland farms are the first the bank has bought since the early 19705. ■ ' Mr Chappell said that the three farmers and others who have had to sell to private buyers would all nave failed even without the drastic downturn in farm incomes this year. “Most of them have been in trouble for two years or more.” Management had been a problem as much as the economy. The Rural Bank would try to sell any farm it was

forced to buy. The Canterbury farm had already been privately sold at a price which would lose the bank several thousand dollars of the original loan. The two Northland farms are under negotiation with potential buyers. Further purchases would depend on interest rates and the exchange rate, said Mr Chappell. If the exchange rate were to return to where it had been after devaluation last year, the Siblems facing the farmsector would largely be ved. Mr Chappell would not reveal yesterday what percentage of farmers were in arrears with their Rural Bank loans, although he said it was higher than this time last year. According to f figures given by the Minister of Agriculture, Mr Moyle, in Parliament two weeks ago, the bank issued 47 default

notices between April 1 and September 27, and 27 of those had been subsequently cancelled. The bank had 2035 accounts in arrears — 5 per cent of its 40,298 accounts compared with 4.6 per cent in arrears in 1984. The bank has this financial year suspended principal payments for 408 mortgagors, deferred charges for 134, capitalised arrears for 10, and extended loan terms for 38. The fact that the bank has “bought three farms is nothing” when considered in the context of the bank’s total number of clients. The bank has told farmers that it is prepared to extend the length of loans, suspend capital repayments, and even postpone interest payments until income came in later in tie season in cases where farmers are “performing at a satisfactory level.” Rakaia sale halted, page 3.