Guarantee a new part of drought help

Press, 22 June 1989, Page 3

Guarantee a new part of drought help

By

OLIVER RIDDELL

in Wellington

The Government has guaranteed farm lenders’ advances to droughtaffected farmers as.part of the redrafted “Carry On” package for the east coast of the South Island.

The original package announced in March failed to attract interest from farm financiers or drought-stricken farmers. The redrafted package followed discussions between farm leaders, lending institutions and Ministry of Agriculture officials.

On Monday Cabinet instructed its Policy Committee to fine-tune the details and release it yesterday. The Minister of Finance, Mr Caygill, and the Minister of Agriculture, Mr Moyle, described it as “unblocking the drought relief pipeline.” But Mr Doug Kidd (Nat., Marlborough) said the dismal failure of the March package and the intervening three months had taken “hundreds of farming families close to the brink.” The two Ministers said the redrafted package had got around the earlier reluctance of farmer financiers to advance funds to those with low equities on their properties.

The Government would guarantee loans to 80 per cent of the principle over four years. The maximum amount guaranteed for each farm would be $45,000, and through only one lender, they said. The original package provision, where the Government would pay the interest for two years, would remain. The package has been extended to include Marlborough.

The Ministers said that in the redrafted package lenders would be able to recover as much of their loans as possible from the farmer and, if unable to recover all of it, could then turn to the Government for the balance.

Eligibility would be determined by who was “viable” but unable to raise adequate finance to continue farming, as defined by the .categories in the original package.

Mr Kidd said the real issue was whether seasonal financiers believed that farmers had a realistic chance of shaking off the effects of the drought in the two to four year period.

Fewer farmers would meet that test now than could have three months ago if the original package had been satisfactory.

The nature of the guarantee was essential to the success of the package, he said.

If the Government required farmers to be sold up by seasonal financiers before it met its guarantee, then lenders would be reluctant to foreclose on old and valued clients, with all the trauma that entailed.

“This package offers struggling farmers a further two years on Death Row,” Mr Kidd said. The inclusion of Marlborough was welcome if it meant that at least the hardest hit farmers had access to the exit and social welfare packages that had been available in North Otago and Canterbury for some months now.

Messrs Caygill and Moyle said the Government’s concern all along had been to ensure effective relief.

“We have been very concerned that the original delivery mechanism did not work in the way intended,” they said.

Miss Ruth Richardson (Nat., Selwyn) said the Government’s craftily written statement might make city-dwellers believe that Labour had helped drought-affected farmers. Those in the rural sector would see it for the incomprehensible and incomplete document it was, she said.