THE H.B. TRIBUNE MONDAY, MARCH 29, 1926. AGRICULTURAL CREDIT.

Hawke's Bay Tribune, Volume XVI, Issue 87, 29 March 1926, Page 4

THE H.B. TRIBUNE MONDAY, MARCH 29, 1926. AGRICULTURAL CREDIT.

The Commission that has been Sent abroad by our Government to enquire into the working of agricultural banks and the like, and that at latest advices had gone to the Continent to gather information, should be able to glean a good deal from the recent investigations and conclusions of the British Ministry of Agriculture on the same subject. Its report was made .public only a day or two before our last mail left London and efnbodies suggestions that should be .of interest to those who advocate the establishment of independent agricultural banks in this country. In the first place, the report professes to provide nothing more than a basis for further consideration and discussion of the problem of “agricultural credit,” which is defined as that of finding , “an adequate agricultural substitute for the industrial joint stock method of obtaining working as well as initial capital.” From the discussion of existing facilities in these respects it is made apparent that in neither do they meet the farmer’s requirements as well as the methods already long established in this country. There is, for instance, nothing like our system of Government advances to settlers to provide capital for acquiring or improving the land, while the ordinary trading banks are by no means so elastic as our own in furnishing temporary accommodation to fill seasonal necessities. The report adopts the view that by much the more important r.speet of the problem is the provision of short-term credit required for such purposes as the purchase of stock, fertilisers, feeding-stuffs, seeds etc., as well as for the operations of marketing. It is recognised that the absence of adequate capital for these purposes often leads to a premature realisation of produce, to the surfeiting of markets, and to a consequent failure to secure best prices. It will probably come as some surprise to our own farmers, so many of whom are accustomed to have these annual needs supplied by banks and by stock and produce agencies upon the direct security of their stock and produce, that no such system obtains in the Old I Country, where the law would apI pear to have made no provision for | the giving of such pledges. There, however, it is the practice for merchants to supply farm requisites on the “understanding” that the farmer will sell his produce not through but to the merchant. As the merchant may choose his own time to obtain fulfilment of this undertaking, the interests of the farmers are often sacrificed to those of the merchant. The banks, on the other hand, i make temporary advances only upon a personal guarantee or upon the ; deposit of easily realisable collateral I security, neither of which is in many cases readily forthcoming. The aggregate volume of bank credit [afforded to farmers is thus very ; much restricted, and it is pointed i out that, while the value of stocks ! and crops on farms in Great [ Britain at harvest time may well be in the neighbourhood of 400 million

sterling, the Ixank advances made against them average only about 25 million. In order to enable the banks to operate more widely in this direction it is suggested to provide for the granting of “chattel” securities such as our own long familiarstock mortgages and wool and crop liens. An essential difference is, however, proposed in that there should be no public registration of* such securities, publicity being regarded as “fatal to any system of agricultural credit in Great Britain.” All that is proposed in this respect is a bankers’ register upon which securities of the character in contemplation could be entered, and which would be open to inspection by the banks alone. “This,” says the report, “would protect the banks and avoid the publicity about which the farmer is naturally sensitive.” Such tenderness on the part of most New Zealand farmers has long since disappeared. Agricultural banks as we have had them discussed in this country do not commend themselves to the British Ministry of Agriculture. “For ordinary trading purposes,” the report declares, “the joint stock banks provide the best channel for agricultural credit. No other lending institutions (such, for example, as a system of specially created agricultural banks) could be expected to rival their resources or experience.” On the other hand, there is approval o£ a system of “co-operative credit.” The report suggests “the formation of agricultural credit societies whose function it would be to endorse their members’ promissory notes in respect of advances from the banks, the security behind such societies being their whole assess, including the uncalled share capital.” Societies of this kind, it would appear, are already in existence and operating in respect of advances made by the Government under the provisions of an Agricultural Credits Act, which it is suggested should now be abandoned. These are, in short, the proposals advanced by the British Ministry to provide for the periodic wants of British farmers.