A review of the rural credit system in New Zealand, 1964-1979

Abstract

The period 1964-79 was an eventful period for New Zealand's rural industries, dominated by economic and financial difficulties. Profitability was inadequate in certain periods, a situation which was aggravated by the adverse terms of trade in many years, the rise in inflationary pressures from the late 1960's, significant increases in livestock killing and processing charges, as well as rises in transport charges after the OPEC decision to escalate oil prices in 1973. In addition, many agricultural industries faced a new marketing situation following the United Kingdom's decision to join the European Economic Community. After the late 1960's, there was a failure of livestock units to increase, and an apparent trend away from livestock farming towards the latter part of the period. This report does not purport to be a comprehensive coverage of all aspects of New Zealand's system of rural credit from 1964 to 1979. Rather, the purpose is to highlight significant trends and events over the period, thereby facilitating a thorough perspective of the current rural credit situation. Trends in the demand for, and supply of, rural credit are discussed, the influence of Government policy is then analysed, comment is made on back-up facilities which assist in the operation of the rural credit system. The Rural Banking and Finance Corporation dominates the current rural lending scene in New Zealand, and is likely to continue to do so in the future. Therefore, its function and methods of operation are extremely important for the rural credit system. Finally, issues arising from the present system of rural financing are discussed, and appropriate areas for further investigation are indicated.