WELLINGTON NEWS

Hokitika Guardian, 21 June 1929, Page 3

WELLINGTON NEWS

AGRICULTURAL CREDITS ACT

(Special Correspondent.)

WELLINGTON, June 18. hast year the British Government passed the Agricultural Credits Act, hut it was only in January last when the Act became fully operative. By the end of April last no less a sum than 2-} million pounds had been applied Tor long-term loans against mortgages of agricultural land and in respect of major permanent improvements to agricultural land and buildings. In the same period over 1000 applications had been made for short-term credit from the ordinary hanks by farmers and co-operative societies. British farmers are very conservative and many months will pass before the full effect of the Agricultural Credits Act "'ill he felt, hut it is generally agreed that facilities that it affords for getting advances will he increasingly used

as time goes on. j The scheme is no hastily devised makeshift. Years of' careful prcpara-| tion were put into it by experts before it reached the Statute liook. In the opinion of many well qualified to express an opinion the new law will in time change the whole basis of farming nv England. The working of the scheme relays examination. Broadly considered it falls into two parts. The first facilitates the granting of long-term loans for permanent works, and the second enables the farmer to obtain advances on security of such assets as his crops and stock. The longrterm credits are under the control of the specially created Agricultural Mortgage Corporation of which all the great banks are shareholders and which at present is financed by a special Government grantNegotiation's extending over a long period were necessary before the banks' could he induced to come in>- on the scheme, but in the end the negotiations wore successful, and the immense network of branch banks brings the credit system to the farmers’ doorstep. In a year or two the Government backing, it is contemplated, will be withdrawn and the public will be invited to subscribe to the corporation, which will be classed as a.trustee stock. Adequate measures have been taken to protect the interests ..of the corporation. They Have a panel of valuers in all parts of the country, and when an application for credit is made they appoint one of them to value the mortgaged property and are prepared to advance loans up of two-thirds of that value. The loans are made for periods not exceeding GO years and are repayable by equal halfyearly instalments', of principal and interest combined. For a 60-year loan the half-yearly payment is £2 15s per £loo,'and this payment covers interest and repayment of loan and all other charges other than the cost of valuation and the stamp duty on the mortgage. If such loan is desired for a shorter period the half-yearly payments are adjusted accordingly; for instance on a 30-year loan it would be £3 7s Tld per £IOO, and inducements are held out to the farmer to repay before the full time expires

Not less important, however, is the scheme under the Act for developing land and increasing its productivity. Advances are made under slightly different terms for almost any kind of development work-—drainage, irrigation, reclamation, dyking, and erecting groyns, sea walls and defences against water, clearing, trenching, planting, the provision of cottages, the erection of. farm buildings or sawmills, water wheels, engine houses or kilns, Boring tor water, construction of reservoirs, dams' or weirs, the erection df jetties for facilitating iof persons or oi agricultural stock and produce, the making of farm roads, the provisioned drains, structural additions or alterations ,- f to farm buildings and other works! The maximum statutory period of the loan for such permanent works of improvement to the land is 40 years and the half-yearly payment for such a loan is £3 per £IOO. : The short-term loan arrangements are likely to become even more popular with the farmers when they are fully appreciated, for they provide the means of mobilising the temporary agricultural wealth represented by growing crops and stock. Taken together with the provision of fixed capital to be sunk for long periods in the acquisition or; improvement of land and the puichase of equipment this second scheme for applying the working capital to be used for short periods in the growing, harvesting and marketing of crops may be regarded as perfecting the system of agricultural credit. A means of facilitating the flow of capital into agriculture wherever it can be piofitably used, for these reasons is thus assured.