Farming families facing ‘huge pressue’ from rural lending and banks

Navigation for News Categories

Photo: RNZ / Nate McKinnon

Farmer confidence in their banks has plummetted to the lowest level in nearly a decade while the government considers the need for an independent inquiry.

Federated Farmers carried out a banking survey of more than 640 farmers in May that found only 51 percent of them were satisfied with their banks. This was down from 80 percent in 2018.

While a quarter of survey respondents were neutral on the topic, more than 23 percent said they were dissatisfied or very dissatisfied with their banks – a new record high for the survey that has been running since 2015.

The lobby group’s commerce and competition spokesperson Richard McIntyre said farmers faced higher interest rates than their urban counterparts.

He said alarmingly, one in four farmers reported coming under undue pressure from their bank.

“Rural banking issues are nearing crisis point and farmers are quickly losing confidence,” McIntyre said.

“Things have clearly gone from bad to worse, with consecutive surveys showing all the key metrics we track heading in the wrong direction.”

He said the results were more than just statistics, and banking issues were having a negative impact on rural communities.

“These numbers represent real Kiwi farming families who are clearly under huge pressure from high interest rates, rampant inflation and reduced incomes.”

The group added another question to the survey this year, ‘Do you think New Zealand banks are presently demonstrating a positive commitment to support farming through difficult periods of high interest rates?’

McIntyre said it was incredibly disappointing that only one in five farmers responded with a ‘yes’ to that question.

“At a time when farmers are really struggling, I would have hoped to see our banks stepping up to help, but instead they seem to be tightening the screws.”

McInytre said there were widespread issues in the rural banking system that needed to be urgently addressed.

The group has made a submission to the government urging it to carry out an independent inquiry into rural banking, which it was considering.

The issue was discussed at Parliament’s Primary Production Select Committee on Thursday morning.