Transactions of RHASS Volume 1940 - Page 037
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| Year | 1940 |
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62 SHORT-TERM AGRICULTURAL CREDIT. including planting), and to give the crop a good dressing of farmyard manure for £12 to £14. per acre or thereabouts. The farmer so doing benefits in that he relieves himself of all risk of poor yields and poor prices and damage or wastage in the pits; he is sure of his cash return even though it is a modest one, only barely covering the. value of the dung and the work done ; his land is improved by the unexhausted manurial residues from the heavy dressing of artificial manures usually applied by the merchant. Certainly he waives for a time all opportunity of ‘ cashing in ’ on a really good potato year, which comes from time to time, but the practice is essentially a means of insurance for the small grower. Apart from his artificial manure bills he saves the heavy outlay on seed potatoes—which may range from £4 to £8 an acre or more—and, if he bides his time, he can work his way in to the crop during a cheap seed year and start growing potatoes on his own account. A Somewhat similar arrangement to the letting of potato land is common in the pea-growing districts of Yorkshire, where some large grower-merchants may take annually 500 acres of land for pea-growing; no doubt many other customs in other districts serve a similar purpose. Both these devices have this in common—they are but stepping~st0nes towards financial independence, temporary expedients adopted by arable farmers whilst money is tight, especially if they have recently taken a farm which is just rather big for their purse. Dairy farmers and mixed farmers similarly situated often turn to retailing as a means of enabling them to accumulate additional capital—although retailing has many pitfalls for the unwary—or alternatively, they may build up a sizeable economic unit of either pigs or poultry which, granted good fortune, give high returns and quick capital turnover. EXIsTINc FACILITIES: THE BANKs. Notwithstanding these short-cuts, the farming community makes heavy calls for additional accommodation on the traditional sources of credit. First and foremost let us take the joint-stock banks, which, it has been officially stated, had advances outstanding to Scottish farmers amounting to over £7,500,000 at the 28th May 19381; these bear interest at 4:} per cent on the fluctuating daily balance of secured over- drafts and 5 per cent on unsecured overdrafts. Demands for bank accommodation are of two kinds—— 1 ‘Seotiish Farming: Tenth Economic Report, 1937-38.’ The figures were furnished by the eight principal Scottish joint—stock banks. SHORT-TERM AGRICULTURAL CREDIT. 03 (a) Seasonal accommodation for the purchase of store stock; these may be called self-liquidating overdrafts, since they are wrped out once the stock is sold. (b) Fluctuating overdrafts more or less permanent in character which bad times or losses may cause to persist over a long period. The banks may often ‘carry’ these for a long time; they would periodically ask for a copy of their customer’s farm balance-sheet, and although they might endeavour to reduce his overdraft where the margin of safety (2142. the surplus of assets over liabilities) was low, they seldom, no 1 am told, force him into liquidation. It is held by many that the banks are the best channel to which the farmer should look for short-term credit—on the grounds that the making of loans is their normal function, Hmt they have ample funds at their disposal, and that the 1211(- of interest is known to the borrower. Actually, however, many farmers—especially when their financial position is not too secure—find their banker rather difficult of approach. But a sound borrower can always be sure of ample bank accommodation, the limit of which is determined not merely by his actual financial resources and the security he can ol‘l'er, but by the banker’s estimate of his character, his business ability, and his enterprise. The main objection to bank credit is, in some cases, the local agent’s lack of real insight into farming problems, which gives rise to much misunderstanding; and perhaps lack of mntiiiuity of policy where an agent is transferred elsewhere. lint. there would be less cause of discord if it were commonly l'l'llllSed that the banker’s job is to supplement the farmer’s Hull capital—not to supply him with the whole, or nearly all of It ; he usually can, by virtue of his long experience and lns knowledge of men, shrewdly appraise the credit-worthiness of potential borrowers ; those refused are generally not very sound. 'If any criticism is to be levelled at the joint-stock banks of this country in their attitude towards agriculture, it is that, notwithstanding all the resources at their command They should set their faces rather rigidly against granting a generous measure of financial assistance to the young farmer embarking on a farming career with very limited capital resources, however enterprising and promising he appears to he. Critics often allege that the banker can “never go beyond his_paper ” ; hence, although the man of substance, well established and able to offer adequate security, need never be afraid of asking his bank manager for an overdraft The man most In need of temporary accommodation, to enable him to go ahead with plans for increasing the nation’s food Supply, receives a very cold welcome from the banker. His whole farming career may be jeopardised because the banker, |
| Title | Transactions of RHASS Volume 1940 - Page 037 |
