With a senior bank official, a farmer and a property developer involved, the discussion was full of colour to say the least.
We like many other farms have a portion of farm debt, but unlike our compatriots in other sectors, we will pay every cent we owe. Farms have the unenviable position of having a very attractive asset which in most cases is collateralised at 150% + to the value of the liability. So who is going to write down farm debt? The simple answer is nobody.
Write downs in my opinion are simply reinforcing the reckless behaviour we went through during the Celtic Tiger, essentially telling guys not to worry; we will put out a safety net regardless how negligent your actions were. This inversely is punishing the conservative tax payer who didn’t chase the quick buck and now has to pick up the bill via austerity policies.
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A simple solution rather than debt write downs would be interest only for a medium term of 5-10 years, during which period the majority of defaulters negative equity would have eroded with the expected, and already happening, uplift in the economy and housing prices. It also looks like inflation is coming over the horizon which would further aid this cause.
Through debt write downs we are encouraging the reckless behaviour of the past ensuring that our past will once again become our future. All the while, we farmers will quietly go about our business and pay every cent we owe, as we always have. Are the banks and government looking for less farmer and more cowboy?
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With a senior bank official, a farmer and a property developer involved, the discussion was full of colour to say the least.
We like many other farms have a portion of farm debt, but unlike our compatriots in other sectors, we will pay every cent we owe. Farms have the unenviable position of having a very attractive asset which in most cases is collateralised at 150% + to the value of the liability. So who is going to write down farm debt? The simple answer is nobody.
Write downs in my opinion are simply reinforcing the reckless behaviour we went through during the Celtic Tiger, essentially telling guys not to worry; we will put out a safety net regardless how negligent your actions were. This inversely is punishing the conservative tax payer who didn’t chase the quick buck and now has to pick up the bill via austerity policies.
A simple solution rather than debt write downs would be interest only for a medium term of 5-10 years, during which period the majority of defaulters negative equity would have eroded with the expected, and already happening, uplift in the economy and housing prices. It also looks like inflation is coming over the horizon which would further aid this cause.
Through debt write downs we are encouraging the reckless behaviour of the past ensuring that our past will once again become our future. All the while, we farmers will quietly go about our business and pay every cent we owe, as we always have. Are the banks and government looking for less farmer and more cowboy?
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