Farm Rural Bank debt same in private sector

Press, 2 December 1987, Page 51

Farm Rural Bank debt same in private sector

PA Wellington The $39.5 million that farmers owe the Rural Bank in overdue payments is matched by similar debts to private sector financial institutions. Provincial Support Group spokesman, Collis Blake said.

Rural Bank figures show about 6500 farmers owe the $39.5 million on overdue mortgage payments and Mr Blake said a similar number were late in paying back private sector banks and stock and station agents.

He said the Rural Bank had told the group that it held 42 per cent of total farm debt with the re-

mainlng 58 per cent held by the private sector. The group convened a meeting in Wellington aimed at reaching agreement with the Rural Bank, private sector financiers and Federated Farmers on how to deal with the high farmer indebtedness. However, Mr Blake said the meeting was not taken seriously by the private sector groups which did not turn up at the meeting.

He said in spite of this the group was going ahead with its plan which involves freezing farm mortgage arrears. The group put the plan

in action in Northland last week, he said. It involves a complete ban on forced sales of provincial real estate and the freezing of mortgage arrears for 18 months. The group also wants repayments linked to the farmer’s gross revenue turnover. This would mean repayments could only come from 20-30 per cent of a farmer’s gross turnover.

Mr Blake said this protected the farmer but also meant the financier would not be tied to a fixed low level of repayments. He said while the plan was negotiable it would be

enforced as It was supported by farmers. Physically stopping forced farm sales was a last resort but one the group was prepared to take, he said.

The executive director of the Bankers Association, John Belgrave, said the association did not think it appropriate to attend the meeting.

He said he believed the Rural Bank would have a larger debt loading from farmers in very bad situations but over all the level of debt faced by private sector banks would be similar to the Rural Bank’s.