INTERMEDIATE CREDIT

Evening Post, Volume CVIII, Issue 118, 14 November 1929, Page 10

INTERMEDIATE CREDIT

ALTERATIONS TO ACT

The Commissioner of Rural Intermediate Credit (Mr. J. "W. Macdonald) announces that important developments in the working of the rural intermediate credit system are anticipated as a result of the passing of the Rural Intermediate Credit Amendment Act during the session of Parliament just closed. As is well known, the scheme has already been utilised to a very considerable extent by dairy farmers in the dairying districts of the Dominion, their use of the provisions of the Act having been facilitated through the assistance of those dairy companies which have undertaken to guarantee loans under Part 111. of the Act.. The system hitherto adopted of granting a loan of a fixed amount which, is liquidated over a period of five years by deductions from the milk cheques, has proved specially suitable to the needs, of the dairying industry, and, moreover, the maximum of £1000 hitherto operating for any one loan has been sufficient to meet the needs of the average dairy farmer.

In the case of those farmers, however, who ,arc engaged in sheep faming or in grain growing, the maximum of £1000 has been scarcely sufficient to meet their financial requirements during that portion of the year when expenditure has to be incurred in connection with their farming operations and no revenue 33 being received. Moreover, in contrast to the ease of the1 dairy farmer, the sheep farmer and grain grower receives the greater portion of his revenue within a few months during the production season, when his indebtedness is rapidly liquidated either in whole or in part. The principal alteration effected by the amending Act is the raising of the limit of loans from' £1000 to £2000 in the case of any one borrower, this limit being more commensurate with the needs of the sheep farmer and grain grower. In order, also, to make the scheme more suitable to the needs of these classes of farmers, the board has decided to introduce a system for the fixing of limits up to which these farmers will be able to draw for their seasonal requirements, the amounts being reduced or liquidated from the proceeds of the next season's produce. The limits will be fixed with reference to the amounts the board would be prepared to lend on the usual margin on the proffered security, • and the charge on stock, crops, etc., will be registered against the security to cover present and future advances. Interest will be charged only on the amount owing by the borrower from time to time, and the position of each borrower will be reviewed; annually by the board, when it will be decided whether the limit should be varied.

In view of the fact that sheep farmers and grain growers have, generally speaking, found difficulty in securing suitable guarantors for loans under Part 111. of the Act, it is probable that the major portion of the lending under the new system now being introduced will be effected through rural 'intermediate credit associations, thus rendering it unnecessary to obtain guarantors. Several associations arc now operating in sheep farming districts some of them having been formed expressly in anticipation of the new system being introduced, and it is expected that the announcement of the raising of the limit of loans and the special provisions now being made to meet the needs of other than dairy farmers will stimulate the formation of such associations in other sheep farming districts. In the meantime it will be of interest to farmers to know that the board is in a position to receive applications either under the-direct provisions of the Act or through rural intermediate credit associations up to a limit of! £2000 in each case.