FINANCE FOR FARMERS.

Putaruru Press, Volume VIII, Issue 368, 11 December 1930, Page 6

FINANCE FOR FARMERS.

INTERMEDIATE CREDIT. Morrinsville Association. The second annual meeting of the Morrinsville Co-operative Rural Intermediate Credit Association Ltd. was held on Wednesday evening, the chairman, Mr. F. W. Seifert, presiding. In moving the adoption of the report and balance-sheet, particulars of which have already been published, the chairman expressed regret that'more shareholders were not present. Shareholders should take a greater interest in the administration of the association, for they should remember that they were liable to the association to the extent of the uncalled capital of the association. Only one shilling in the pound of the shares taken up by members of the association had so far been called up, but if unexpected losses should occur some of the balance would have to be called up. He mentioned this to show the importance of shareholders attending meetings to satisfy themselves that directors were managing the business on sound lines. The rural intermediate credit scheme had been brought into being at a time when conditions would thoroughly test it. If it had been in operation several years ago the associations would have had four or .five years in which to get on their feet, but owing to falling '-prices it could hardly be said that they had even one good year. Reviewing the balance-sheet, the chairman said the Morrinsville association had made advances totalling over £IB,OOO during the year. The paid-up capital of £llO 19s, representing a first call of one shilling a share, had been placed on deposit. There was no prospect at present of the association having to call up the other 19 shillings of the shares, but further calls would have to be made if the association made a loss on its workings. This uncalled capital constituted the association’s main reserve.

The revenue of the association consisted mainly of the difference of one half per cent, between the rate of interest paid to the Rural Credit Board and the rate charged to members, namely, 65 per cent. In addition the association received £ls from fees paid by those taking up loans. The scale of fees was very low—los 6d for loans under £SOO, 21s for loans up to £IOOO, and 42s for loans over £IOOO. The secretary’s salary had been increased from £lO last year to £3O this year, but this was very low remuneration for the work he had to do. The directors were allowed a small amount for running cars when they made inspections of properties, but they were not given money for the benzine they used when attending directors’ meetings. These were the sole expenses for handling £IB,OOO. “ I am still of the opinion that the association method is the best method of lending money under the Rural Credit Act,” continued Mr. Seifert. To date the Rural Intermediate Credit Board had lent_ out £664,000, of which £209,000 had been lent through rural credit associations, like the Morrinsville association, and the balance through dairy companies. It seemed to him that it was not advisable for dairy companies to guarantee the repayment of such loans, although it put the board on a good wicket. The association method of lending was the only system that “ stood on its own bottom,” for each association borrowed the money from the Rural Credit Board and lent it out to members, so that only members were liable for any losses. The extension of the work of the associations depended on the amount of money that could be obtained from the investing public, so it was most important that rural credit bonds should become a popular form of investment. The security of loans had to be right from the lenders’ point of view. “ We should get more support from the shareholders of the association,” said Mr. G. H. Pirrit in seconding the chairman’s motion. He was sorry so few were present. The rural credit scheme was the only business set up to finance farmers alone. In spite of its name, the Advances to Settlers scheme had been taken advantage of by others than settlers. The rural credit business was run solely for farmers, and the man on the land who had a reasonable chance of “ getting through ” could get an advance from an association, while no other sections of the community could partake of the benefits of the scheme. The way the business of the Morrinsville association had been conducted should commend rural credit bonds to those with money to lend. The district supervsior of rural credit at Hamilton, Mr. F. J. Moore, commented that the balance-sheet was so well drawn up that he had no complaints to make. The results of the year’s operations showed that the association was getting on its feet. Referring to the low administration costs of the association, he suggested that there was no other financial institution in New Zealand which could have lent the same amount of money at such low expense. Mr. Norton Francis, a director of the central board, had told him that stock firms in Canterbury considered it was impossible to lend out money to farmers on a margin of 1 per cent. They said they could not do it under 2 per cent. The money borrowed by means of rural credit debentures issued at 55 per cent, was being lent out by the rural credit associations to farmers at 61 per cent. This was due largely to the time given by directors without remuneration.