SERVICE TO FARMERS

Sun (Auckland), Volume IV, Issue 1057, 22 August 1930, Page 10

SERVICE TO FARMERS

OPERATION OF CREDIT SYSTEM ADDRESS AT PAPAKURA A well-attended meeting: of farmers from the surrounding - district, at the Papakura Chamber of Commerce last evening was addressed by Mr. A. S. Fair© on the Rural Intermediate Credit Act, 1927. Mr. Faire was accorded a hearty vote of thanks at the conclusion of his informative review. Mr. MeEnteer presided. A committee was later set up to go into the question of forming a co-oper-ative rural intermediate credit association in Papakura.

After congratulating the Papakura Chamber of Commerce upon its interest in the Rural Intermediate Credit system, Mr. Faire passed on to review the circumstances leading to the passing of the Act, and the steps taken for its introduction. Following the demands of farmers for better methods for obtaining financial accommodation, he said, the Government appointed a Royal Commission on rural credits in 1925, after investigation in Europe and America, the Commission presented its report and recommendations for a system of rural credit in the Dominion in 1926. The Commission’s recommendations regarding long-term mortgage credit were given effect to by the Rural Advances Act of 1926, which set up a special branch of the State Advances Office. The maximum amount which an individual borrower might obtain under this system was .£5,500. The Rural Advances Act restricted the amount of the loan to two-thirds of the value of the borrower’s land. INDIVIDUAL ACTION

The Rural Intermediate Credit Act of 1927 had given effect, with some modifications, to the Commission’s other recommendations, continued Mr. Faire. The main features were the financing by means of debentures secured upon the aggregate of the assets of the scheme, involving no State liability for the debentures, and, secondly, the scope which the legislation gives for collective and individual action upon the part of the farmers. During the 1929 session of Parliament an amending Act was passed, which provided mainly for the increase of the limit for the amount which could be lent to any one farmer from £I,OOO to £ 2,000.

The administration of the scheme through the Dominion by a board of seven members, of whom the Public Trustee was the chief executive officer, was reviewed by Mr. Faire, who said that although the Act required the appointment of only one practical farmer, two from each island had been given seats on the board. Sixteen districts, each controlled by district boards, which had powers to grant loans, had been defined by the Central Board. The Auckland hoard consisted of Messrs. J. E. Makgill, F. M. Waters, A. A. Ross, farming representatives, Mr. O. N. Campbell, Commissioner of Crown Bands, and Mr. A. S. Faire, district supervisor.

Mr. Fair© urged farmers to invest in the board’s debentures, thus providing funds to assist other farmers, and also gaining investments at profitable rates of interest. The board had recently made an issue of £IOO,OOO worth of debentures. In future the board would have to depend for its funds almost entirely upon public confidence in the soundness of the debentures.

Touching upon the method of obtaining loans from the board, Mr. Faire stated that the board had appointed local valuers to value securities offered for loans, and the fees charged to applicants would be as low as possible. Likewise legal fees had been fixed under the regulations on a moderate scale. LIMIT FOR LOANS Prior to the passing of the Amending Act of 1929 which provided mainly for the increase of the limit for loans granted by the board from £I,OOO to C 2.000. the bulk of the board’s loans had been granted to the dairy farmers. Mr. Faire stated. With the increase of the limit for loan to £2,000, which was more commensurate with the requirements of sheep-farmers, tho board had given careful consideration to the introduction of a system for making the rural intermediate credit scheme equally populat with the sheep and grain farmers as it had proved with the dairy farmers. The system decided upon would provide for the fixing of overdraft limits in respect of the individual amounts and would be generally upon the following basis: (a) The limits fixed will not exceed the amounts to which the board would be prepared to lend otherwise upon the proffered security; (b) all existing encumbrances on the security would reciui to be discharged from the an; it made available by the board. SPECIAL PROVISION Special provision was made for farmers, who had not the opportunity of joining or forming associations, to obtain advances direct from the board, on a bill of sale being given, together with a guarantee from two approved persons to the extent of not less than 20 per cent. The purposes for which loans which might be obtained in individual cases were: (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 of any loan was £2,000, the interest rate having been fixed at 6J per cent. The board was authorised to discount farmers’ promissory notes and bills of exchange. The discount rate had been fixed at 6£ per cent. Dealing with the formation of co - operative rural intermeOate credit associations, Mr. Faire said that at least 20 persons actively engaged in farming should take at least 25 £1 shares in the association. To obtain a loan members filled in an application, giving particulars required, and if he did not hold sufficient shares, he agreed to subscribe enough to bring his shareholding up to one share for every £lO of the loan desired, with a minimum of 25 £1 shares. After a valuation had been made, the association directors, after consideration, would forward the application to the central board or the district boards, which had power to grant loans up to £250 subject to restrictions regarding the margin of security. The associations were managed by a board consisting of the district supervisor and four members appointed by the shareholders. The association took from its borrower members ail securities.

Mr. Faire stated that 34 associations had already been formed in the Dominion and others were in the course of formation.