THE PRESS FRIDAY, FEBRUARY 13, 1987. Forced sales of farms

Press, 13 February 1987, Page 16

THE PRESS FRIDAY, FEBRUARY 13, 1987. Forced sales of farms

The forced sales of farms raise a number of important points, not just the natural dismay and discomfort of those who are dispossessed. Without a doubt, a number of farmers have been crushed by rising interest rates and by the Government policies that compel the restructuring of much farming. The spectre of losing, a larm, and with it a livelihood and a family house, is never far from the minds of farmers in deeply troubled times. This explains some of the depth of feeling in the protests against sales forced by lending institutions.

It needs to be borne in mind, however, that the intention of the Government’s plans to have farm debts restructured was to save viable farms; it was not the intention to sustain farms which are not viable. Farming is a business; and some businesses work and some will fail. It is also important enough to the whole economy to ensure that hasty decisions are not made to put farmers out of business in a time of stress.

New Zealand farming has been characterised for a long time by steady success, and by the fact that very few farms have failed as a business. Yet some farms were in trouble before the present crisis of high interest rates and before the reduction of subsidies. One of the results of the arrangements to reschedule farm debts is a delay in facing up to what was probably inevitable many months ago — a delay occasioned by the process of consultation prescribed by the Government last year. The heat is now being applied to some farmers who are in trouble.

There can be no underestimating the willingness of exasperated farmers to respond to calls to protest on behalf of neighbours almost as quickly as they would rally to help those affected by natural disasters. Rural concern runs deep these days, but it is not always directed by wisdom. Disruption of farm sales, indiscriminately applied, could quickly become an infringement of the rights of others to conduct their proper businesses. One reason why such farmers’ protesting has featured so much in the news recently is its novelty. Last year was predicted by many in the know to be a year of forced farm sales, rural depopulation and farm aggregation because of mounting debts. The rural depopulation was real enough when many farm servicing industries folded up. Fanners themselves tended to stay put.

New Zealand has not had a “natural exiting” of farmers for some years. First, the supplementary minimum prices and now the farm debt restructuring have blocked most of the 5 per cent annual turnover of farms to be expected from historical data. Figures released yesterday show that more than 5000 of New Zealand’s 50,000 farms of more than

20 hectares have applied for debt restructuring: the outcome so far has been 1100 approvals and 150 refusals. At the beginning of 1986 the Prime Minister, Mr Lange, was musing aloud that thousands of farmers were in an impossible financial position and would have to sell. Nothing has happened to product prices to

improve that position markedly. But what at first glance seemed a complex and selective scheme to discount farm loans and to redistribute equity among lenders had the almost immediate effect of stopping forced farm sales completely. The scheme became a sort of court of financial appeal, with a huge waiting list, where everyone was at least guaranteed a hearing.

In fact, 88 per cent of farmers who get through the process get a favourable outcome — a welcome extension of time to wait for things to improve.

Now, more than seven months after the scheme was introduced, the plug on farm sales is only being eased out slowly by the most adventurous of the lenders. The rural groups that are mobilised to express concern are trying to ensure that farm finance meetings have preceded any attempts to sell up a farmer. That is fair enough.

A reasonable conclusion is that the Government, all financiers, and even the leaders of Federated Farmers, agree that not all farmers can be guaranteed a place on their farms for as long as they want to stay. Some will have to go. Their debts, incurred even before the latest and most regrettable downturn in meat and milk prices, would ordinarily have ensured their departures before now. The rural protest leaders, who are not always office holders of Federated Farmers, will need a lot of tact and common sense to decide who is deserving of the militant support they are prepared to offer. Bad judgment on who deserves support may be fatal; for the confidence of lenders in farming, and in fanners, must be preserved for the future.

Seasonal debt has mounted to alarming proportions, particularly in Canterbury where droughts, irrigation development, and widespread cropping have all been a drain on cash advances. Most lenders have acted very responsibly up until now, if it could be called responsible to continue to advance money to farmers already deeply in debt. The assessments of the banks, financiers and stock and station agents can usually be relied upon to ensure that every borrower gets every chance. With the court of appeal now sitting, farmers are well served by the prescribed processes. It should not be assumed that every time a farm auctioneer raises his voice there is valid reason for protest.