HEIR TO DAIRYING

Gisborne Times, Volume LXXXII, Issue 12533, 20 April 1935, Page 5

HEIR TO DAIRYING

STATE ADVANCES AT -i PER CENT

COMPANIES AND SUPPLIERS ,V ’• ...R, jo BENEFIT.

INDUSTRY TO BE IMPROVED

(B ress Association). WELLINGTON, April IS

In an interview today,' th’e actingMinister of ' Finance' s ' "(?Ir ’Hamilton) intimated that ‘he had just concluded discussions with' 1 Mr MacMillan (Minister of Agriculture) and with m calibers of the 'Executive Commission' 1 - of Agriculture in regard! to - the advances to dairy companies and to dairy farmers under Section 26 of the Agriculture (Emergency Powers) Act.

Mr Hamilton stated that authority was given ih: the Act, for advances to bo made cn -such terms and: conditions as the Minister for Finance might prescribe! for the following purposes ' (a) : construction, rc-con-struction equipment and improvement of dairy factories and (b) Securing improved conditions in and about dairies (within the meaning of the Dairy Industry Act 190 S). The Minister stated that emphasis had been laid by the Dairy Commission. by the Dairy Commission on the necessity for steps being taken to improve tlie quality of dairy produce for export and with this end in ’View,' Parliament made provision for advances to be made' 'by the Government for the purpose of modernising in dairy factories and improving the conditions in and about farm dairies.

The' Minister pointed out: that it was the duty of the Minister for Pin arieo to prescribe the terms and con actions upon which, advances might be made and he had 1 pleasure in now announcing that lie had agreed to the rate of interest in respect of advances under the Act being fixed at 4 per cent. This low rate had been decided; upon primarily c$ an inducement to dairy companies and to dairy farmers to effect improvements that wei’o regarded as urgently neces sary. It was anticipated that, the Government would, be able to obtain good security for all advances made under the Act ih case of loan to dairy companies for the purpose of modernising equipment in factories.

The Minister further stated that loans would generally' be made for terms of from one to 10 years depbridrig upon tb e circumstances of each case . The security to be taken for these loans would be by way of debenture security over all assets of the applicant company, which would incorporate an agreement to repay loans by the setting aside of a fixed proportion of the butterfat returns for the ppurpose. ■ The Minister weii on t-o state that ho realised that in most cases the asset s of tho company would probably already he pledged either to a bunk or to other lenders as security for advaiivces made. Jn such cases, the Government would be prepared lor advances made. In such eases, a debenture ranking secohd to the existing debenture. It was also recogniscdj that companies relied upon banks for overdraft accommodation until the -season's produce was sold cn the London market. ■ The Government would be prepared in taking a second debenture to protect subsequent advances by banks (which would usually be secured by first debenture charge) up to an agreed upon limit.' The precise details of the debenture to be taken to secure the Advances by the Government would perhaps vary in. individual case 1 The Act also' provided' for advances to dairy farmers for the purpose of securing improved conditions in and abouiit dairies, hi this connection ho would like to Seo a'•'measure of cooperation by dairy companies. Some companies already had power to borrow money for tlio purpose of lending to suppliers’ and had expressed their desire to do so. An extension of this principle would be. very desirable in connection with the transactions now under consideration—that was to say the Government would be pleased to consider applications' from dairy companies for advances to enable companies to make loans to their suppliers for the purpose of effecting- improvements in and about farm dairies.

“I need, hardly dress tlie desirability of this from the dairy coni-, panics' point of view” he continued, 1 “as it is conceivable that factories cannot continue to accept supplies if conditions in dairies are not .up t& ,th o standard. I am aware that some companies have passed’ resolutions restricting their. operations to making 'butter and cheese but it is hoped that these companies mill not consider it inconsistent' with this policy to lend their support t 0 this movement which is” designed to enSiirc them continuity of supply milk and 1 cream of the highest- cpiality. Such Joans td' companies the Minister ’added, would be secured by means of a floating d'i;.beriture' ! ' over ! 'th4 :/ assets of-th e and'it would! ’be' a matter for the company to ! arrange: with its farmer suppliers for repayment of the loans> <• - . - As! an 1 ilternativo, the Minister Suggested that companies might see their way to guarantee repayment of advances made i; by v 'the ’ Government to approved farmer-suppliers in cases m ; Here : arrangementscannot be made, by dairy companies to (borrow for the"-■ purpose of lending to/their suppliers;the .Goverriniertt would; be prepared to consider application's from farmers - who dvere desirdiis of iinprov ing conditions) in and about their dairies;.'; '’lndsuch-casesj the security would! be taken by way of a binding r,nd enforceable agreement between the Government, farmer and bis rn'ortgag'ses-pfor- t-he re'iiUymeht of 'fife'; advaneb' and 1 interest, tbereon as a first charge on the produce from the farm. “I would like to emphasise,” he sajd’ “ that'-t-he -security required in these cases) will have to be. dgi-eed to' nbfc. only 'by the farmer bivtd.hlsb by Jiis mortgagees. But -there is nothing fun ! treasonable in tlu-s, aft the loans ednt. 'i,.., ’• ■- -

corned 1 are ’to be- granted for the purpose of effecting essential improvements to farms to enable 'productiori Uto> ‘be continued and thereby adding to t'b e "value of the mortgagee's -security. This method will, necessarily entail a certain amount of expense and trouble which, though, reduced t’o a’"nfihinium ; it is desirable to avoid if pcfsifible/y It is therefore, urged that farmers should nso theh best endeavours- to- obtain their •finance through dairy companies;