Rural Bank owed $39.5M

Press, 20 November 1987, Page 7

Rural Bank owed $39.5M

PA Wellington Fanners owe the Rural Bank $39.5 million in overdue mortgage payments and the bank says it will soon move more strongly to get its money back. The arrears in interest and principal repayments are owed by 6475 farmers who have borrowed a total of $5OO million in mortgages from the bank. The extent to which farmers are in arrears with their mortgage payments has increased more than tenfold since the Labour Government took office and began its programme of restructuring the farming sector. In June 1984, the Rural Bank was owed arrears of just $2.9 million each month. By June last year that figure had risen to $13.5 million, and since then, mortgage instalment arrears owed to the bank have increased by roughly $2 million each month. The bank does not know how much is owed to the private sector. The bank’s general manager, Mr Ray Chappell, told Parliament’s primary production select committee meeting yesterday that for every dollar farmers owed, 42 cents came from the Rural Bank and 58 cents was borrowed from the private sector. The Rural Bank has total mortgage lendings of $2.8 billion, which means

that altogether, farmers owe more than $6.6 billion to private and public lenders.

Farming sources say privately that if farmers decide they cannot or will not pay mortgage instalments, they are far more likely to choose the Rural Bank as the institution whose payment demands can wait. The bank’s assistant general manager in charge of lending, Mr Arnold Snodgrass, agreed yesterday that it was possible the Rural Bank was bearing the brunt of mortgage arrears. “There seems to be two reasons for that,” Mr Snodgrass said. “For one thing, the Rural Bank is seen as being more paternalistic, and less likely to take action if the payments are not made. The second reason is an element of punishing the Government for changes which are seen to have made farming less profitable.” Up till now, the bank has gone easy on farmers who have not paid their interest and principal repayments on time. It has put most of its effort and resources into restructuring farmer debt, under the debt discounting scheme introduced in June last year.