Declining Satisfaction Among Farmers
The latest Federated Farmers Banking Survey has revealed a significant decline in farmers’ satisfaction with their banks, reaching an all-time low. Conducted in mid-November, the survey highlights growing concerns among farmers about undue pressure from banks and high-interest rates.
Survey Findings
While 55.6% of farmers remain satisfied with their bank relationships, this figure has dropped by 0.7% since May, marking the lowest level of satisfaction since the survey’s inception in May 2015. Notably, 25.8% of farmers reported feeling undue pressure from their banks in the past six months, a 2% increase from May and a new record high.
Interest Rates and Financial Pressure
Richard McIntyre, Federated Farmers Domestic Commerce and Competition spokesperson, pointed out that many farmers are unhappy with the high-interest rates, which they find disproportionately higher than those for residential borrowers.
The average mortgage interest rate reported in the survey was 8.26%, a significant increase from 7.84% in May 2023 and 3.79% in May 2021. Overdraft rates have also risen, reaching 10.52% in November from 10.07% in May.
Call for Independent Inquiry
McIntyre emphasised the need for an independent inquiry into rural banking, citing the financial and mental strain on farmers due to high costs, falling commodity prices, weather events, and perceived unfair treatment by banks. He also noted farmers’ concerns about the state of competition in rural lending and the impact of regulations, such as bank capital requirements and risk weightings.
Mental Wellbeing and Communication
The survey found that 44.3% of farmers felt their mental well-being was affected by debt levels, interest rates, and other pressures, up 0.7% from May 2023. On a positive note, there was an improvement in perceptions of bank communication, with nearly 57% rating it as very good or good.
Budgeting and Planning Advice
Federated Farmers advises farmers to maintain detailed, up-to-date budgets, with 64.5% of farmers having current season budgets and 75% of share milkers doing the same.
However, only 18% have prepared budgets for the next season. McIntyre encourages farmers to stay in touch with their banks and rural professionals and to discuss ways to improve their financial positions.
Support and Mediation Services
McIntyre also highlighted the availability of support services, such as local Rural Support Trusts and Farm Debt Mediation, offering guidance and assistance to farmers facing financial difficulties.
Survey Background
The Federated Farmers Banking Survey, conducted twice yearly since 2015, is part of Federated Farmers’ partnership with AgriHQ. This collaboration aims to provide New Zealand farmers with informed, united, and stronger advocacy.
