FARMERS’ FINANCE

Hawera Star, Volume XLVII, 13 March 1928, Page 5

FARMERS’ FINANCE

INTERMEDIATE CREDIT SCHEME SOUTH TARANAKI ASSOCIATION. SUPPORT FROM OPUNAKE. A recommendation to farmers of the O.punake district wishing to participate in the benefit of the Rural Intermediate Credit Act. to join with the South Taranaki Association rather than form a separate association at present was adopted by a meeting of about 50 farmers at Opunake yesterday afternoon, when short addresses dealing with the scheme were given by the Hon. O. J. Hawken, Minister of Agriculture, Mr 11. G. Dickie, M.P., and Mi- C. Freybcrg, the district supervisor. The convenor of the meeting, Air J. D. iConaglen, of Pikama, was elected to the chair and explained that the speakers were present in response to requests made that thy should afford particulars concerning the . Intermediate Credit 'Scheme.

“The associations, the formation of •which is provided in the Act, are really small limited liability companies with farmers as shareholders set up for their common advantage,” said Air Dickie. To form an association a minimum of “0 members is required, each taking up 25 shares of £1 each, five per cent of which or 25s is payable when' a» loan ' is taken up, or shares to the nominal j value of 10 per cent of the amount of i a loan raised by him, whichever is the ; harger. The maximum loan to be ob- i tained is £IOOO and 5 per cent, of the 1 shares taken up by" a borrower must < be paid in cash before the loan is '• paid over. ” I Provided he had fulfilled his obliga ! '< tions and his retirement would still j 1 Lave 20 members in the particular I - association, a shareholder wishing to! ] leave could do so by handing over his shares to anyone requiring an advance. : The maximum amount of interest widen 1 could be charged was seven per cent. ] and compared with previous methods of - finance such terms would afford a big advantage to farmers requiring accom- ( modation. It had been suggested that { one-quarter per cent, interest would be J sufficient to pay administration ex- : ponses, but in the speaker’s ’opinion, ■ the amount was too low as on that ' basis considerably over £IOO,OOO would have to be handled to realise sufficient to pay r a secretary". Air Dickie considered that a half per cent should 1 be set aside for administration and a 1 similar amount, for reserve. STRONG AfEM-BWftSHTP WANTED. « Air Dickie stressed that the rural 1 intermediate credit scheme should not , be confused with the 'State Advances < Department, the former being a separate organisation functioning inu.cr < the Control Board, of which the Public j Trustee for New Zealand was the prin. cipal executive member. < The South Taranaki Association al- | ready formed was supported by more than the minimum of 20 and the Control Board had agreed to incorporation ] of the association. The District Public Trustee, Air C. Freyberg, was the dis- j triet supervisor. Provisional directors j had been appointed and at the statutory meeting permanent directors would j ■be' appointed. Air E. K. Cameron, of f liawera, had been appointed secretarypro tern. In order to put the associa- ; tion on a sound footing it was desirable that up to 100 or 150 members should be enrolled and if farmers of \ the Opunake district desired to partici. ; pate in the scheme, he would suggest that for the present they" join the t South Taranaki Association, The formation of a local association .could be t considered at. a later stage if it was c then deemed necessary". In conclusion, Air Dickie referred to t an anonymous letter written to the “liawera IStar,” in which it had been 1 stated that the Act made no provision 1 for the repayment of loans. “Ample t •orovision for this is made by the regulations governing the scheme,” said £ Air Dickie,” the reason that the con- i ditions were not expressly stated in s the Act being that alteration which c might be found necessary in the light c of experience would consequently have v to be dealt with by Parliament.” c x APPROVED PURPOSES. f •" • f “We are anxious to see the inter- t mediate credit scheme go forward, j i said Mr. Hawken. “It is not purely a. New Zealand scheme, hut has' been s put- into action successfully m nearly all the older countries of the world. _ The question of farmers’ finance, ban been 0110 of tlio bugbears of the- JJominion, but under the two rurai I credit Acts adopted by the- Government greatly improved methods from '■ the farmer’s .standpoint would be af- ' forded him of obtaining accommoda- ' tion at reasonable terms. The inter- < mediate credit ..scheme was intended to- help farmers requiring money for ' stock and general farming purposes, and' the provisions governing the purposes for which money could be raised were based on generous lines. The purposes for which the board was authorised to grant loans were set out in a pamphlet issued by the Public Trustee, and were as follow: (a) The -■learing, fencing, draining and general improvement of land in occupation of the -applicant ; (b) the erection of buildings on smeh land; (c) the purchase of implements, stock, seeds, plants,, trees and other things required in respect of the occupation and use of the land; (d) the- payment of any mortgage, debt or other liability of the applicant incurred' in relation to farming ope: ations; (e) any other purpose in relation to farming operations that may lie apDroved by the board. Farmers requiring money for such purposes could obtain up to £IOOO, reoayahle. in five years, ‘by joining one of the associations or by direct application to the board. The Government had nut £400,000 behind the scheme, ind with 'good management on the part, of the associations, and it would he to the collective interest of members to see that the individuals acted up to their obligations, the scheme should sue eed. In other countries it had been found that- the losses, were small. ! j THE FIRST ASSOCIATION. j The Alinister thought- that the South j Taranaki Association would be the first | one formed in the Dominion, and he j hoped to see the scheme taken up by • farmers throughout the district', and the Dominion. The methods of financing the scheme were detailed by the district supervisor, Air. Freyberg, during the course of further explanation. The whole scheme was to make use of the collective credit of the farmers, -said Air. .! Freyberg. As a. nucleus of the funds the’ Government was advancing (£400,000, and further money would be 1 raised by the issue of bonds, the security for which would be the> security on which money was lent. The

administration was first of all vested in the central hoard, and as the scheme became larger a great number of applications would be dealt with direct by district boards. A. farmer wishing to obtain an advance had the choice of joining an association or applying direct to the board. Under the former method he was collectively guaranteed l by the other members of the association, but in tile case of the individual application to the board a guarantee l of 20 per cent of the amount advanced was required. " QUERIES- ANSWERED. A number of questions were answered . fol-'owinxt the speakers’ addresses.- . ' Replying to the chairman, Mr Dickie said that in the case of a dairy company guaranteeing on applicant, the board could advance up to" 80 per cent, of security, and the company guarantee would be in respect of the last 20 per cent, of the loan. If SO per cent, was advanced and the security had to be realised and produced only 60 ippr cent, f the whole, the guarantor would lose the 20 per cent. Answering the chairman further as to he w a, dairy company would stand should it -o©e the supplier guaranteed, Mr Ha when said the only course open to a. company, unless security on property or chattels was given, would be to arrange an agreement that the supplier would remain until the loan was 1 Renlving to Mr J. S. Tosland, Mr "uckie'snid that though the Government was placing £400,000 behind the s home only two-thirds would hp actually advanced in loans, the. remaining i dYd being placed to .reserve. In Ame-rica-it had been found that bonds were always at par, and often above that level! The reason that the bonds would not go below :par was that anyone wishing to renav a loan could do so with the bonds.' The bonds being issued under the long term credit scheme would yield about £5 10s per cent. _ Answering a further query, Mr Dickie ‘-ad that the legal charges for raising loans were provided for in the Act. Up to £250, the charge wa,s £2 2s; up to £SOO £2 12s 6d; and. in excess of - £SOO to £IOOO the charge allowed was £8 3«. “When a loan is raised the borrower arranges with the hoard the rate at which the loan will be repaid,’’ said Mr Hawken in answer to Mr ToslandOn the proposal of Mr Tosland, seconded bv Mr D. M. O’Su'livan, the j recommendation already indicated was 1 j adopted. , j Votes of thanks were accorded: the 1 speakers in appreciation of the information made available.