The Brussels Post, 1980-03-12, Page 17MOM
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-THg. BRUSSELS"' POST, ,MARCH. 1.2, 1900r ,
High interest -won't go, ears
. BY RHEA HAMILTON
Efficiency is the key cOnsideration in
farming with today's high interest rates,
Federation of Agriculture members heard,
Thursday night. John Murphy, froin the
Royal Bank, Alec McLeod, Bank of
Commerce, and. Bill McEachern, a Grand
Bend area accountant agreed on that in a
panel discpssion at an HFA meeting in
Exeter.
Mr. •IvIcEachern said that the level of
pessimism, at the recent farm show in
London was unwarranted.
—. "As an accountant I see a lot of financial
information'but I Only know of three farmers
that have, gone bankrupt 'recently" said Mr.
MtEachern. • "Of those three only one
declared bankruptcy and the other two- are
being encouraged to do so out of misman-
agement or expansion."
Mr. McEachern agreed that high 'interest
rates and increased costs have dampened
profits but 85 percent of the farm businesses
are ownedoutright and farmers on the whole
are not heavy users of credit. The exceptions
are young farmers and those doing a lot of
expanding,
"Interest rates are not causing the
calamity" Mr. McEachern said and cited
figures illustrating his point. Out of a study
of 174 farms in 1978 the average group were
75% percent, financed for ,their feed,
livestock, and machinery. After also paying
a mortgage of 10 percent (which is not
possible now) the average gro,.ipwould miss
their payment of $53,000 (principle and
interest) by $2,000 or $3,000.
"Invariably farms are 25 perdent financed
and with farmers using the interest to reduce
their income tax it all helps".
Producers in the beef and pork business
would be more -affected by interest rates.
Many are heavy borrowers for their stock
and suffer from fluctuating prices, he said.
Alec McLeed urged farmers to remember
the basics, to dheck the efficiency of their
operations. He suggested a revolving
operating loan to reduce costs. A monitor
and check throughout the year would help
with cash flow.
"Farmers have a tendency to use a lot of
short term credit" said Mr. McLeod. "The
first problem comes in operating loans which
are affected by the market", Mr. McLeod
said. "Set up a long term loan and disctris
your finances with your banker".
Mr. McLeod stressed in individual
situations that the farmer have good
eo-operation between himself and his
banker.
Mr. Murphy was asked who gets the
profits from the higher interest rates. "As
prime rate goes up so' do the deposit rates.
'The higher interest is to stop burrowing"
said Mr. Murphy. "The farmer takes what
the'market gives him and he can't take his
own price." • ,
Another drawback is that farmers are all
competing ,for the same source of funds.
Both, the tile drain loans (at 6 percent) and
farm credit (12 percent) have limited funds.
Members questioned the panel about
what they thought the future would hold for
the farming community . Although the
farms would tend to be larger units, the
panel agreed, that the farmers would be
younger. "Look around the room here. There
is a large number of farmers here under 36
years" said Mr. Murphy.
It was suggested by Tony McQuail, West
Wawanosh, that there should' be a greater
spread between- borrowing and depositing
rates. He questioned whether the economy
would respond to the high interest rates or
whether anyone will be able to see if the
economy is hurting and be able to hold back.
One farmer was concerned with the
difference in interest costs between. Quebec
and Ontario farmers. In Quebec, interest
rates to farmers are 8 percent and there is no
limit to 'the funds available to the farming
community. The panel offered no. answer
except Ontario could shoot funds out the
same way. The drawback is that it creates an
artifical enviroment and more government
intervention. -
Mr. McEachern in general forsaw a
disaster. "Profits are not there and with
re ducing inventory more problems would
be created. Young farmers are having to
leave and the farming community is' really
suffering." he said.
Mr. McLeod disagreed. "Interest rates do
make it difficult but they are not the only
,factor."
It was suggested by the bank representa-
tines that the rates would not likely go down
and that "we may look forward to 22 percent
interest". Farmers were encouraged to
explore the idea of partners and not buy new
expensive machinery for income tax. pur-
poses,
Other answers for farmers looking at
machinery are to own larger pieces co-
operatively. Mr. Murphy suggested that
three or more get together and apply for a
syndicate loan at 11 percent. The maximum
'loan per partner is $15,000 each or a total
loan of $60,000. ,
The meeting heard that. John Phillips,
BY DAVE. SYKES
The Huron County Board
of Education could .provide
a vital link with area industry,
through continuing
education programs and ap-
prenticeship programs in the
manner` ofof community col-
leges in the future.
Don Longwell, director of
training and development at
Champion Road Machinery
Ltd., and chairman of the
Huron County Industrial
Training Committee' told
board members Monday that
industry takes agreat interest
▪ in the secondary school level
and the training programs
offered. He added that
specific training or ap-
prenticeship programs could
be implemented for the
beneift of both the individual
and industry.
Longwell was instrumental.
in initiating the. Huron
County Industrial Training
Committee earlier this year,
a group representing
industry in Huron County,
and presently examining the "
editor of Town and Country, had contacted
HFA vice president Gerry Fortune, and
apologized for an editorial that did not "go
over well in Huron", "It was not his
intention to offend anydne." he said.
In response to his editorial Huron
members requested that the Ontario'
Federation of Agriculture disassociate them-
selves from the publication.
Bill Crawford, Huron Fieldman, reported
on the membership. After a drop below
2,000 membership averages at the 2,014
mark.
school apprenticeship
program, that has been im-
plemented by other' boards.
High schbol technical
programs could provide
specific training as well as
co-operative on the job
training with industry and
the student would earn credit
on his apprenticeship.
• There is a diverse group of
interests smong industries in
Huron County and a need to
improve efficiency of training
in trades. Industry if often
required to seek skilled
labour from outside he area
and many of those people
often, leave after a short
period.
"If you bring in people
from outside the area they
often don't stay," he said,
"But people here could be
I trained for a specific job and
they are a known quantity."
. Every week more and more
people discover what mighty
jobs are accomplished by low
cost Post Want Ads. Dial
Brussels 887-6641.
An International Battery
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Board, industry links sought
training and skill require-
ments o"f" those industries.
The group is conducting an
extensive survey of the
county's industry ,to deter-
mine the needs and possibly
involve the education system
in meeting those needs.
"We will find out what the
training needs of industry
are and ask the board to help
meet those needs," he said,.
While Longwell is
advocating coninuing
education programs geared
to industrial needs and
sponsored by the board', the
needs are diverse and
sometimes, exacting.
"There is a need for
programs geared to manage-
ment and executive develop-
ment as well as switchboard
skills, reading and general
literacy," Longwell said.
"Industry would support
such programs and people
Wouldn't have to go outside
the county for training and
development."
Longwell also asked the
board to consider a high
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