Novel bank scheme for troubled farms
PA Tauranga Trust Bank Bay of Plenty hopes to start a farm management operation aimed at avoiding the sell-off of financially troubled kiwifruit orchards and eventually returning the farmers to their land. The general manager, Mr Clive Tippens, said that the bank was negotiating with Bay Horticultural Services and other companies to set up a scheme stalling the forced sale of orchards. He was hopeful negotiations would be settled during the next 10 days. The contracted company would take complete control of the orchard, including financial costs, until the orchard was producting a return. Costs would be recovered from the sales of kiwifruit trays with any extra money going towards servicing the bank debt. Mr Tippens said many kiwifruit orchardists had "borrowed to the hilt” to finance their orchard operations and had been severely affected by the market slump and drop in land values. If a farmer decided to leave his property the bank, under the proposed scheme, could take over and run the
property as a going concern until the land values rose. The arrangement would continue until the farm operation became financially viable again in its own right. Ideally the farmers would eventually be able to return to the property, Mr Tippens said. The scheme would only work with farmers who were prepared to leave their orchards in the hands of the bank. If they insisted on staying on the property the bank would have no choice but to have a mortgagee sale of the property. “There are only three or four orchards in trouble at the moment, but there could be more in the future,” Mr Tippens said. The bank was attempting to set up the scheme because forced sales of orchards were often bringing in only half the true value of the land. It was a no-win situation, but if the land was not sold its value would eventually rise again. Mr Tippens said it was the first time the bank had ever embarked on a scheme like this, but it was important for Trust Bank to stand by local concerns such as the kiwifruit industry.
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Press, 1 December 1988, Page 27
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356Novel bank scheme for troubled farms Press, 1 December 1988, Page 27
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