Dairy Companies Help Rural Credit Scheme

Sun (Auckland), Volume II, Issue 483, 12 October 1928, Page 13

Dairy Companies Help Rural Credit Scheme

METHOD OF PROTECTION ENGENDERS CONFIDENCE From the outset, the dairy com- ! h?tT eS . haVe * hown considerable crerT.7** the rural intermediate credit system, and have been quick to recognise the opportuni- : ties It affords them to assist their Suppliers to secure financial ac- 1 commodation on the most favourable terms. This information is supplied in the first annual report of the Rural Intermediate Credit Hoard, which has just been submitted to Parliament. The attitude of the dairy companies, i states tile report, is attributable to the fact that the methods by whicn loans ™rh° bdn ! Me £ f om the board are of u, nature that the companies are si°i£nH Iliently placed to enable their system™ t 0 take advanta se of the In tho first place, a dairy company 13 in a position to assist supplier's to a co-operative, rural intermediate credit association, and once an association has been formed anions suppliers it can further assist by placing its existing organisation at the disposal of tho association, and undertaking the secretarial work in connection \\ ith it. If desired the (/■rectorute of wV?h a ?£ 0 7‘ at J O IL cou H iar ecly coincide tvUh that of tho dairy company, thus reducing the expenses of the associa- :*° a i 0 a min ‘imm. and at the same time have at its disposal all the information in the possession of the dairy tac “ ory a£ * to farming experience, reliability, and financial experience of prospective borrowers. This course has already been followed in the case ot one association formed in the Waikato district, and it is known that other dairy factories are contemplating similar steps. When loans are being arranged, it can be made a condition that an agreed Portion of the milk cheque shall be applied from time to time in reduction of the loan. DISCOUNTING METHOD When loans of smaller amounts are required by the suppliers, a dairy company can utilise tife discounting method, and endorse the promissory notes of approved suppliers for subsequent presentation to the board for discounting, at tile same time protecting itself by its knowledge of suppliers and by requiring provision to be made for the payment of the note at maturity by periodical deductions from milk cheques. Where sufficient funds are received by the company from deductions from milk cheques during tho currency of notes discounted, it can adopt the practico of retiring some of the notes out of the moneys received by it, making an adjustment on account of interest among the individual suppliers, or if the company is working lynon a bank overdraft, it can utilise the interim payments received by temporarily placing them to the credit of its bank account, and pass on to the suppliers the saving of interest effected in this manner. In these ways it can take the maximum advantage of the discounting method, by which loans are obtainable at the most moderate discounts and by a very simple procedure. The report concludes by stating that tho increasing extent to which dairy companies are utilising the system for the benefit of their suppliers contains a promise of the healthy development of the board's business in the future The close interest of the dairy company organisations in the loans granted by the board under such arrangements will engender a feeling of confidence.