Drought relief for viable farms only

Press, 30 June 1989, Page 2

Drought relief for viable farms only

By

DAVID LUCAS

The Government has confirmed that financial assistance under its revamped drought-relief scheme for South Island farmers will be restricted to farmers who have prospects of being viable.

Farmers in a strong financial position and those with no viability prospects have been excluded from help under the drought-rehabilitation loan scheme. Details of the relief package were announced yesterday by the Minister of Agriculture, Mr Moyle. Mr Moyle said the responsibility for making the package work now rested with farmers and financiers. The original carry-on package announced in March was described as unworkable by farmers and financiers. Under the rehabilitation loan scheme, the Government will guarantee 80 per cent of each loan made by financiers to eligible . farmers for drought rehabilitation expenditure. The loan guarantee will run for four years and the Government will pay the interest for two years.

any individual farm business will be $45,000, of which the . Government will guarantee $36,000 for four years. the Government will pay the interest on the loan for two years at a rate of one percentage point above the Government stock rate, plus GST. On present figures, this would give an interest rate of 14.3 to 14.5 per cent. Financiers will be allowed to negotiate additional costs for administration and fees directly with the farmer and to be paid by the farmer. The Government says it expects financiers to keep costs and interest rates to a minimum and it will monitor additional cost.ings. for farmers. Lenders -.will be charged a guarantee fee of 0.5 per cent on the outstanding sum guaranteed by the Government.

whose farm businesses (based on 1987-88 accounts) had a ratio of interest and rent to gross farm income of 15 per cent or more. (Gross farm income is defined as revenue from farming only, less stock purchases, and exludes off-farm income.) Farmers with no viability prospects will not be eligible but will still have access to Adverse Events Family Income Support and New Start grants. The general manager of Wrightson Finance, Mr Denys Crengle, was optimistic that the scheme would work. It appeared to be the best that could be done, given the constraints of the Treasury, although he was concerned at the number of extra charges involved. Mr Brian Harris, assistant general manager of Pyne, Gould Guinness, in Christchurch, said the scheme seemed unneces-

ering the limited amount of assistance it would provide. Expenditure on drought rehabilitation measures under the loan scheme would be available for capital stock, pasture renewal and crop establishment, greenfeed crops, supplementary feed, and fertiliser (applied to permanent pasture only). The Government announced also that drought suspensory loans to farmers in all drought areas from North Otago to Marlborough would be rolled over another year to Julj' 1, 1990. Farmers eligible for a drought rehabilitation loan could have a Govern-ment-funded farm management consultancy to a maximum of $6OO. Farmers’ excluded from the rehabilitation scheme on the ground of a weak financial position would be eligible for a farm appraisal to help them to make a decision to leave farming.

The scheme will be available to farmers

The maximum loan to

sarily complicated consid-