Farmers overall remain satisfied with their banks, but pressure is building and sharemilkers are feeling it most a Federated Farmers survey has revealed.
The Federated Farmers Banking Survey, which is undertaken quarterly to gauge the relationship farmers hold with their banks, has indicated that perceptions about ‘undue pressure’ have gradually built.
Federated Farmers Dairy chairman Andrew Hoggard says that it comes at no surprise considering the current environment.
“Despite sharemilkers being particularly exposed at present bank satisfaction remains strong overall.”
The survey shows 81 percent of all farmers and 79 percent of dairy farmers were ‘very satisfied’ or ‘satisfied’ with their banks. However, 9.7 percent of all farmers felt they were coming under ‘undue pressure’ regarding their mortgage, up from February’s 8.5 percent. For dairy farmers this was up to 12.9 percent from 10.9 percent last quarter.
Mr Hoggard said it was important to recognise that to date other farming types, like sheep and beef and arable, are not reporting nearly the extent of bank pressure and numbers have hardly shifted since the survey started.
New Zealand Bankers’ Association chief executive Karen Scott-Howman says that banks are still working closely with farmers to help them plan and manage through the tough times, and the survey results are positive given the current environment for farmers.
“Banks remain committed to supporting their farming customers, and they will continue working closely with dairy farmers and sharemilkers to help support the viability of their businesses,” Ms Scott-Howman said.
“The survey shows the vast majority of farmers remain happy with the quality of communication with their banks. Regular two-way communication is vital in times of financial pressure. We encourage farmers to continue talking with their banks early and often about budget planning, managing cashflow and the assistance that may be available to them,” she added.
Mr Hoggard continued: “To end on a positive note, interest rates are relatively low and they are still edging down. Compared to February both mortgage and overdraft rates were down by about 20 basis points to 5.41 percent and 7.59 percent respectively on average.
“Today’s low interest rate environment is a godsend and it will be saving many farmers significant debt servicing costs. Those who remember the mid-to-late 1980s with borrowing rates well over 20 percent will be well aware of this,” Mr Hoggard concluded.
See full report here: http://www.fedfarm.org.nz/files/May%20Banking%20Survey%20highlevel%20results%20NC.pdf