THE PRESS SATURDAY, MARCH 18, 1989. Meagre drought package

Press, 18 March 1989, Page 24

THE PRESS SATURDAY, MARCH 18, 1989. Meagre drought package

Farmers have little enough to thank the Government for in the long-awaited drought relief package announced this week. The Minister of Agriculture, Mr Moyle, seemed to think that any form of relief risked cries of outrage from the urban community; he was at pains to spell out that Canterbury and North Otago risked total economic collapse because of the drought, and that nothing less than the survival of one of New Zealand’s most productive farming regions is at stake. His impassioned — and accurate — justifications for Government action should forestall criticism that the Government is being profligate. Surely they were unnecessary. There is a general appreciation of the gravity of the situation. Most people are only too well aware of the impact the drought has had and will continue to have on rural and urban communities alike. The arguments were overkill when all he was defending was a package that might cost the Government up to $36 million — less than it has already gathered, for instance, in taxes and charges from Lotto.

The cost of the package will not necessarily run as high as this. The biggest charge will relate to the principal feature of the package: an undertaking that the Government will meet interest charges for two years. This would apply to seasonal finance advanced by the normal lending institutions to farmers who would not otherwise be able to obtain loans. Individual financiers will have to decide how many, if any, of their clients are eligible for the scheme and, more important, the finance houses still have to decide if the loan will be made in the first place. The Government guarantee on interest payments might encourage some finance houses to do a little extra business, but farmers still have to find a party willing to accept the risk and therefore confident that two years hence the farm will justify the loan. The package also extends until April, 1990, the income support scheme that ensures a basic living allowance for farming families — essentially a fancy name for the social welfare support guaranteed all New Zealand families — and extends the new-start programme that offers a grant of $45,000 to any farmer who voluntarily sells up and leaves the industry. North Otago farmers who

are already encumbered with suspensory loans for drought relief will be spared repayment until July, next year, and the Government will institute two types of farm appraisal schemes to help farmers decide if they have a future.

None of these measures directly deal with the costs of restoring drought-blasted pasture or replacing capital stock that has had to be sold or slaughtered. They do not provide specifically for transporting winter feed into the region for stock that has been retained. Nor do they ensure that the extra money will be available even for those farmers prepared and financially equipped to take on their own shoulders the high, drought-related costs that will come on top of the normal seasonal finance requirements. Just how far towards meeting these aims the drought package can be stretched is uncertain. The Ministry is still sorting out the guidelines and this might take a month to six weeks. Even on the Ministry’s own estimates, the package will not help some farmers to carry on, even though they were economically viable before the drought. In other words, the Ministry acknowledges that some farmers whose difficulties have arisen through the drought, or have been compounded by the drought to the extent that a redeemable farming operation has become a hopeless one, will get nothing from this package and will go to the wall anyway. In short, if the drought has ruined a farm financially, the package will not save the enterprise. The package is not designed to resuscitate briefly a dying farm; it is calculated to sustain the wounded.

Mr Moyle says that the Government’s “post-drought adjustment programme” is ensuring the survival of one of New Zealand’s most productive farming regions. Time will tell. He has failed to convince a lot of people in the rural community that the Government has done any more than provide a temporary and patchily applied palliative. The attitudes of lenders will be the rear test and their attitudes are likely to be fixed more by the conviction that farmers will pay their way out of the drought than by any inclination to end up by requiring mortgagee sales. The weather in the next few weeks may be important in determining whether they will inspire many loans or very few.