By Deanna Harris
Federated Farmers has been scrambling to determine what impact the South Canterbury Finance receivership decision will have on the rural economy.
“We just don’t know what is going to happen. There will be a variety of people affected in a variety of ways,” says president of Federated Farmers Don Nicolson.
Yesterday the Government announced it will pay $1.6 billion to the trustees of South Canterbury Finance which was put into receivership and $175 million will be lent to the receiver.
Mr Nicolson said yesterday afternoon Federated Farmers was rushing to get information about what the receivers are planning and what impact that will have on farmers.
“We have made contact with the receivers, McGrath Nicol, in order to get clarity about how existing revolving credit facilities will be managed. In the meantime, customers should ring SCF direct on 0800 808 117 to discuss their individual circumstances,” he says.
“Normally it would mean a freeze on funds, so people can have a breather. What we need to know is if the credit lines are going to be open.
“At this stage of the season farmers have a number of large outgoings with little or no income. Seasonal finance facilities are critical to farm businesses because it will be a number of weeks before farm revenues resume.”
Mr Nicolson says the Government made the right move and the deposit guarantee scheme will mean the outcome isn’t as bad as it could have been.
The Government has bent the rules of the retail deposit scheme by paying out some foreign investors that wouldn't have normally been eligible – about $20 million dollars.
Allan Hubbard has put out a written statement blaming the Government and saying he could have saved the company.
".... They bring down the boom, take me out, freeze my access to my personal funds and now so many families, small businesses, farms and enterprises, throughout the south island in particular, are going to be seriously suffering.
"It was an unnecessary, knee jerk bureaucratic response and it required a strategic solution not a sledge hammer,” said Mr Hubbard
Mr Nicolson says most farmers that he knows of are very mindful of their role around debt financing and they work with their banks wisely.
“We have also made contact with all of the major rural lenders and they are fully aware of the situation. This may also be an opportune time to speak with trusted farm advisors.
He says farmers need to remain calm and patient.
Federated Farmers has opened up a help line 0800 327 646 for those who wish to discuss their situation.
Meanwhile, Finance Minister Bill English has pleaded with those in the south to show gratitude to taxpayers
“I would hope that the depositors of South Canterbury and those who are supporting the company are grateful for the support of the New Zealand taxpayer because without that support, Timaru and South Canterbury could have ended up $600 million out of pocket and I would expect to hear a bit more from that community about the support of that business.
“We agree it would be much better if we had this five or six hundred million dollars available for schools or hospitals or better public services but the promise was made to depositors in 2008 to prevent them from pulling the financial system down.”
Mr English says by returning the investments of all depositors in South Canterbury Finance, there will be minimum disruption to the economy.
While this will incur an upfront cost, it will ultimately reduce the cost to taxpayers by about $100 million by ensuring the Crown is not liable for interest payments after the date of settlement.
"Furthermore, being in control of the receivership process takes the pressure off the receiver to quickly sell any assets,” Mr English says.
"This ensures the Crown can get the best deal for taxpayers. Businesses that owe money, or are owned by South Canterbury, can continue to operate and there will be a minimum of disruption to both the local and national economy.”
3 News