RURAL CREDITS

Southland Times, Issue 21099, 3 June 1930, Page 3

RURAL CREDITS

METHOD OF PROCEDURE. NEW SYSTEM EXPLAINED. A correspondent signing himself “Farmer” has made the following inquiry regarding the new system of intermediate credit • I would be pleased to learn about the necessary procedure relative to obtaining a loan of a few hundred pounds from the rural credit scheme on stock and chattel security. Finances are going to be short through this winter and there are probably many who would be glad of the information. I understand that in the North Island it is possible to get an advance through the dairy factor}' against next season’s milk, but that down here cannot be worked. Why is that? The Information Desired. The Rural Intermediate Credit Act, 1927, and the regulations issued under it, authorize the board to make its funds available for the benefit of the farming community in three different methods:— (a) By loans to farmers either individually or as members of Co-operative Rural Intermediate Credit Associations. (b) By loans to fanners’ co-operative organizations. (c) By discounting to a certain extent for banks or approved financial institutions, farmers’ promissory notes or bills of exchange held by them. Where the application for an advance is made by a farmer either individually or as a member of a Co-operative Rural Intermediate. Credit Association, the purposes for which the funds are to be applied must be one or more of the following:— (a) The clearing, fencing, draining and general improvement of land in the occupation of the applicant: (b) The erection of buildings on any such land. (c) The purchase of implements, stock, seeds, plants, trees and other things required in respect of the occupation and use of any land. (d) The payment of any mortgage, debt or other liability of the applicant incurred in relation to farming operations. (e) Any other purpose in relation to farming operations that may be approved by the board. The maximum amount which the board may advance to any one person is £2,000. A person who has obtained a loan of less than that amount by individual application or as a member of a Co-operative Rural Intermediate Credit Association, or by means of promissory notes or bilks of exchange discounted with the board, may obtain a further loan by any of such methods provided that he does not thereby obtain more than £2,000 in all. Insofar as the provision of finance by dairy companies is concerned, the method adopted by the majority of northern factories is to endorse in favour of the Rural Intermediate Credit Board the promissory note given to the factory by the individual farmer. The company can do this only if power to endorse is contained in its memorandum of association, and it will be found that practically all the Southland dairy companies lack this power. The method of overcoming the difficulty is to apply to the Supreme Court for authority to alter the memorandum of association and it is a question for the directors of the factory whether the expense involved would be justified by the amount of business.