The latest Banking Survey conducted by Federated Farmers has uncovered increasing pressure on farmers from their banks, with a record number of farmers reporting ‘undue pressure’ and declining satisfaction with their banking relationships.
The survey carried out in mid-November, found that 25.8% of farmers felt undue pressure from their banks in the past six months, a 2% increase from May and the highest since the survey’s inception in May 2015. Satisfaction levels have also dipped, with 55.6% of farmers satisfied or very satisfied with their banks, down 0.7% from May, marking the lowest point in the survey’s history.
Richard McIntyre, Federated Farmers’ spokesperson for domestic commerce and competition, expressed concern over these findings. He highlighted the compounded stress farmers face due to high costs, falling commodity prices, extreme weather events, and now, added pressure from banks. McIntyre advocates for an independent inquiry into rural banking to ensure fair and proper banking systems for farmers.
A significant dissatisfaction among farmers is the high interest rates on loans, perceived to be much higher than those for residential borrowers. The survey reports an average mortgage interest rate of 8.26%, a substantial increase from 3.79% in May 2021.
Overdraft interest rates have also risen, reaching 10.52% in November from a low of 6.28% two years prior. McIntyre notes the disparity between farm lending and urban home loan rates, especially at a time when banks are reporting record profits.
The survey also revealed that 44.3% of farmers feel their mental well-being is impacted by debt levels, interest rates, and other pressures, a slight increase from May 2023. However, there was a positive note regarding communication, with nearly 57% of farmers rating their bank communications as very good or good, breaking a five-year trend of decline.
Federated Farmers encourages farmers to maintain detailed and up-to-date budgets in response to these challenges. While 64.5% have current season budgets, only 18% have prepared for the next season. McIntyre advises farmers to stay in touch with their banks and rural professionals and to discuss ways to improve their financial standing, such as regular budget updates or sharing farm environmental plans.
For those facing difficulties, resources like local Rural Support Trusts and Farm Debt Mediation are available. Federated Farmers, which has been conducting this survey biannually since 2015, continues to monitor these trends and advocate for the needs of the farming community.