Flood of farm finance inquiries

Press, 17 June 1986, Page 1

Flood of farm finance inquiries

By

MARTIN FREETH

in Wellington

The Prime Minister, Mr Lange, has nettled financial institutions with predictions that they will write off debt in a cooperative approach to the farm-finance crisis. Finance-industry sources said yesterday lenders had been flooded with calls from hopeful farmers after Mr Lange talked on Sunday evening of a “big write-off from both State and private sectors.” The Prime Minister’s statements come at a time when private-sector lenders are still locked in sensitive talks among themselves on a joint strategy on farm-debt problems, and when the Government has yet to release its long-awaited policies to tackle the

crisis. Mr Lange indicated again yesterday that he expected the lenders to join the Government in appraising the viability of individual farmers and write off debt as one way to help some. The Government had remained adamant that the State-owned Rural Bank would not be the only lender to write off debt, Mr Lange said.

“We have been steadfast in that, and we have been rewarded by the private sector’s active cooperation and participation in this approach. “They are also prepared to talk with farmer after farmer, with the Government, to have each farm’s viability assessed and each farmer’s prospects enhanced by whatever the appropriate

course, and debt writeoffs is one of them,” he told reporters.

The Prime Minister’s focus on the writing, off of debt was “not helpful at all,” Mr Max Bradford, the Bankers’ Association executive director, said later. “There are a thousand and one things that can be done before we contemplate debt write-offs,” he said.

Mr Bradford has led efforts among lenders into the farm sector — banks, finance houses, insurance companies and stock and station agents — to 1 build a mutual understanding on handling the debt-and-cash problems of particular farmers.

The private-sector plan, disclosed a month ago, is to minimise the risks on all lenders by ensuring a

joint agreement on what actions are taken in each case of a farmer defaulting on loan commitments. Steps taken by lenders could include various forms of debt restructuring to help some farmers stay on the land or minimise the losses when others have no option but to leave.

The plan is believed not to have reached the point of a written accord between institutions, and a public emphasis on debt write-offs at this stage might make some reluctant to commit themselves. Mr Bradford said the plan had been developed separately from the work on new Government policies, although there had been some joint talks in recent weeks.

Mr Lange said he hoped

the Government policy package would be released before the end of the month. In addition to some write-offs, the package would involve “a new type of mortgage understanding,” Mr Lange said.

“It will involve a new and rather novel way of funding a farming programme, and mean that you need to have support for the seasonal needs of fanners.”

He repeated the comments of other Ministers that the package would also include some new social-welfare benefits for farm families forced to leave the land.

Mr Lange also indicated benefit help for farmers who will stay on their properties.

Existing benefits were limited in their usefulness

to farmers, such as an unemployment benefit requirement that the recipient be available for work, he said.

Mr Lange said the Social Security Act had provision for granting extra benefits and this might be used.

A Social Welfare Department spokesman said yesterday no final decision had yet been made on a Waipukurau farmer who had applied for the unemployment benefit, but would not be available for work because of the distance from his farm to possible alternative jobs. The law provided for benefits to be paid in special cases of hardship, although eligibility took into account the cash holdings and some assets belonging to applicants, the spokesman said.