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Banks must be flexible with farmers in 1992



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Media Release For further information: Parliament House, Canberra ACT 2600

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Parliament House, Telephone: 06/2774193

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06/2774193 06/2772053

BANKS M O S T BE M O R E FLEXIBLE W I T H FARMERS IN 1992

Australia's banks must make 1992 the year in which they adopt a more flexible and compassionate approach to clients in the rural sector.

This is the resolution National Party Deputy Leader and Shadow Minister for Primary Industry, Bruce Lloyd, has urged the banking sector to make for the New Year.

"The economic viability of thousands of farms in all facets of

agricultural production is still deteriorating as farmers struggle to survive the worst depression on record," he said.

"The dramatic collapse of export prices for most farm products has dealt rural Australia a savage blow, together with drought and its aftermath and Australia's high domestic cost and interest rate structure.

"Under these dire economic circumstances the banks must take full account of the consequences that would result from their adopting an uncompromising attitude in relation to rural debt."

Mr Lloyd said the rural depression had eroded the capital value of rural properties to historically low levels that put at risk what equity farmers had left in their businesses.

"Farm cash flow is the worst on record in real terms, which adds to the difficulty farmers have in servicing their debt and at the same time providing basic necessities for their families.

"The banks generally have adopted a responsible attitude to the forced sale of farms; as foreclosures in a rural crisis serve only to erode the capital base on the farm sector, and, of course, the asset backing of loans advanced by the banks.

"They must continue to honour this undertaking, particularly if the drought or low commodity prices persist well into autumn."

Mr Lloyd said the area where banks did have to lift their performance was in the lending policies applied to farm clients.

Mr Lloyd said he had been informed of many cases where bank managers had imposed sudden increases in fees, charges and interest rates with inadequate consultation with clients.

"The result of this practice, as well as destroying goodwill, is to create even greater pressure, which could negate the greater

flexibility in their general policy of lending for long term survival.

"The banks are aware of farmer suspicion that they may be pursing a double standard of being tougher on farm businesses than on erstwhile entrepreneurs.

"It is very important that justice appears to be done, as well as being done, including improvements to the welcome draft Code of Practice proposed by the banks. END 30.12.91