B.- 14

18

of the land, as may be the case where he is a share-milker, it is important to ensure that the stock will not be liable to be removed at a moment's notice, possibly at a time unfavourable for realization, and this is provided for by requiring the guarantee of the owner of the farm property to be obtained as a condition of the approval of the loan. Where the farm property is leased for a short term, suitable provision is made in fixing the basis of repayment for the clearing of the loan, or the repayment of the major portion of it, during the term of the lease. Adequate steps are also taken in the case of stock depasturing on leasehold properties to protect the Board from loss as a result of distraint being made by the landlord upon the stock for rental unpaid by the borrower. There has been a tendency upon the part of some borrowers to include part only of the stock upon the farm property in the security offered for the loan. As the taking of security over part only of the stock on the property is likely to lead to misunderstandings and to difficulties in the identification of the stock charged as security, it has been made a rule that all stock on the farm property must be included in the bill of sale. Where the borrower has special reasons for desiring to exclude a portion of the stock, as where this portion is held for sale and the proceeds have been earmarked for some necessary purpose, and the balance of the stock and any other security to be taken show a sufficient margin for the loan, his wishes will be met by undertaking to place the proceeds of that portion of the stock at his disposal if the position of the loan account at the time of realization is satisfactory. Where more than one herd or flock separately owned are run in conjunction, an application for an advance is not regarded favourably unless all the stock is brought within the security, or adequate safeguards are provided otherwise in respect of the possibility of the identity of the stock charged as security being lost. The circumstances of each loan are taken into consideration in fixing the repayments to be required of the borrowers. Regard is had to calls upon the borrower in other directions, and where it is necessary the repayments to be made during the earlier years are fixed on a lower basis than those to be obtained towards the end of the period of the loan, and the borrower is in this manner given the opportunity of establishing his finances on a sound basis. In the case of dairy securities the basis of repayment throughout the full term is laid down at the time of the granting of the loan, though if sufficient reasons for a variation of the repayments are adduced later this basis is not rigidly adhered to. The repayments and interest are secured by an order on the borrower's cream cheques, and arrangements are made as far as possible to collect the total sums required during the flush months of the milking season, leaving the payments free during the winter months when the cheques are small and are as a rule required in full to meet current expenses. The payments are collected either by an order for a suitable percentage of the cream cheques, or for fixed amounts during named months of the season selected by the borrower so that the deductions will not fall due at the same time as payments to be made by him in respect of interest, rent, or otherwise. In the case of sheep loans the practice is to review the position of each loan annually to determine the repayments to be required of the borrower. This course is adopted as there are more extensive changes from time to time in sheep securities than in dairy securities, and it is very necessary to ensure that the flocks do not depreciate in value. Loans are also granted to sheep-farmers under a special system for " limits " which is explained in detail elsewhere in this report. The documents securing the loans provide for all loans being on a " demand " basis, and any arrangements made by the Board for repayments are subject to the condition that repayment of the loan may be demanded at any time. While this is so, the Board exists solely for the purpose of providing farmers with loans on the most favourable terms possible, and borrowers are assured that so long as their securities are maintained and their obligations to the Board complied with the Board will not arbitrarily call up their loans. It is stated elsewhere that the position regarding compliance by all classes of borrowers with their obligations to the Board is extremely satisfactory in regard to both payment of interest on their loans and the payment of the prescribed instalments in reduction of principal. This clearly indicates that the total payments required of borrowers under the conditions imposed by the Board do not. press unduly on them.