Evening star., 1939-05-10
Three Methods 10 Cut
Credit Requirements
On Farms Urged
Virginia Tech Expert
Outlines Program for
More independence
By the Associated Press.

BLACKSBURG, Va, May To-
Three methods by which credit re-
quirements on farms may besre-
duced were outlined today by DR..
j. L. Maxton, Virginia Tech agri-
cultural economist:
l. Growing more feed and food,
thus reducing the increased credit
necessary for cash crop paintings.
2. Accommodating reserves in good
years instead of expanding opera
tions.
8. Making additional annual in
terest and principal payments in
good years, to be used to cover such
payments in unfavorable years.
Periods such as the present in
crease the importance Of readjust-
ments in credit practices. the econo-
mist said. The present low level of
farm prices increases the difficulty
which farmers encounter in meet
ing fixed charges, such as interest
and taxes.
Suggestions for the reorganiza-
ton of the farm business so that
the gross farm income may be large
enough to meet these fixed charges
and current operating expenses in
volve a careful consideration of the
use of credit.
Definite Plan Urged.
"A definite farm management or
organization plan must be involved
in any suggestions for reducing
credit requirements on farms as
means of improving the net re-
turns from such FARMS" DR.. Max
ton explained.
However, in the crop year of
1881 the cotton, tobacco, peanut
and potato farmers of Virginia Sc
cured ample credit to produce large
crops of these commodities at q
cost which was several millions of
dollars greater than the commodi-
ties brought when sold.
THE effectiveness of curtailed or
increased credit can be measured
only in increases or decreases in
the net income as result from the
related changes in farm manage
ment. The individual farmer in
making changes in the farming pro-
gram which seem eXpedient under
the present low price level of farm
products may largely be governed
by his ability to secure credit ac-
commodation.
Efforts by the Virginia extension
division directed toward decreasing
credit requirements for current
financing, DR.. Maxton said, have
chiefly involved increased use of
the labor of the farm operator and
his family in producing food and
feed products which were formerly
purchased.
U. S. Rules Helpful.
The conditions for obtaining ad-
vances from the emergency loan
fund for the purchase of seed, feed
and fertilizer has been the plant
ing of sufficient food and feed crops.
Because of this stipulation by the
Department of Agriculture farmers
in those areas of Virginia where
Federal aid is obtained should en-
ter the cropping season with re-
duced requirement for current
financing.
The production of food and feed
crops carries the minimum amount
of risk, and it is better to be as
Sured of q nominal annual return,
although at a low rate, than to
adopt farm program which prom
ises high returns but subjects the
operator to substantial risks Of los
ing his entire holdings.
Credit has both its use and
abuse" the economist said. "Un-
doubtedly the ease with which credit
has been obtained since 1920 is
largely responsible for many of the
difficulties of the last 18 years, as
well as our present dif1iculties."