RURAL CREDITS.

Hauraki Plains Gazette, Volume XXXX, Issue 5504, 22 November 1929, Page 4

RURAL CREDITS.

REPORT BY BOARD. A PROSPEROUS SEASON. The following is an extract from the Rural Intermediate Credits Board’s report for the year ended June 30, 1929 “The year now under review has been a prosperous one for the farming community. This has naturally had a marked effect upon the business of the board. On the one hand, increased returns have enabled a number of farmers to carry on with less financial assistance than usual; on the other hand, money for investment has been plentiful. A number of institutions which formerly were reluctant to advance money on the security of live-stock have this year been lending freely on this class of security. There is no doubt that the lending business of the board has been materially affected by both these factors. The important aspect, however, is that the farming community, to assist which the board was constituted, has received the benefit both of increased returns and of cheap finance. “It has been found that a preponderating majority of the loans granted by the board have been to dairy farmers. The reasons are not far to seek. In the first place, before the- board commenced business loans were not readily obtainable from financial companies, which, for the most part, had only limited funds at their disposal. In this connection it should be observed that, as a rule, stock and station agents preferred to lend money on other classes of stock, and accordingly these farmers had no source of finance, with the exception of those just mentioned, before the board .was constituted. Then, it must be realised that the majority of dairy farmers had behind them their own co-opera-tive companies, which provided at once the necessary machinery either for the formation of co-operative rural intermediate credit associations among their members or for the guarantee required in terms of the Rural Intermediate Credit Apt in support of a loan direct to the farmer. Those engaged in other classes of farming have no such organisations behind them. Further, while there are comparatively few dairy farmers whose financial needs approach the maximum loan of £lOOO authorised by the Act, yet to the great majority of sheep farmers or those engaged in mixed farming a loan of £lOOO is not sufficient financial accommodation. The proposal to increase the maximum loan to £2OOO has accordingly given an increased impetus to the formation of co-operative rural intermediate credit associations in the grain-growing and sheep-farm-ing districts. Obligations Met. “It is very gratifying to report that it has been the experience of the board that its borrowers have, with very few exceptions, met their obligations in a satisfactory manner. The board has regretfully found itself unable, however, to assist a number of farmers whose capabilities and personal qualifications ■ are undoubted, but who are. unable to proffer adequate security for loans. However’ desirous- the board might feel of assisting such applicants, it recognises as its first and paramount duty the protection of the funds which have been entrusted to it by the Government and by its deben-ture-holders. During the year the policy of the board in this regard has been criticised and the opinion expressed that the board should reduce its standard of security and charge a higher rate of interest, on the ground that borrowers whose security is not of a high order have the greatest difficulty in raising the money at any price.

“Under the method of obtaining funds which the Rural Intermediate Credit Act provides, the ability of the board to borrow money to carry on its operations will at no distant date be dependent entirely on the good repute of the securities held for loans already granted, and consequently, if it were to depart from the high standard which must be maintained in regard to trustee investments, not only would it fail in its duty to the government and its present debenture-holders, but it would also lose the confidence of the investing public and thus destroy all prospects of selling future issues of debentures. Conservative Farmers. “Reference has already been made to the effect which the exceptionally good farming season just past has had upon the lending business of the board. Another factor which must be taken into account is that the majority of farmers are conservative and slow to change., Reports from branch officers go to show, however, that those farmers who have already done business with the board are very well satisfied, particularly as regards the immediate cessation of interest on accounts paid to the credit of their accounts. The board fully recognises that the testimony of satisfied borrowers is the best publicity it can have, and loses no opportunity of ensuring that any suggestions made by borrowers are met wherever to do so is consistent with the safety of its funds.”