More farm­ers feel­ing fi­nan­cial heat

The Northland Age - - Rural News -

More farm­ers are feel­ing un­der fi­nan­cial pres­sure, and sat­is­fac­tion with their banks has slipped, ac­cord­ing to last month’s Fed­er­ated Farm­ers bank­ing sur­vey.

The bian­nual sur­vey drew 1004 re­sponses, more than dou­ble that of Novem­ber, and while the great ma­jor­ity of re­spon­dents were still happy with their banks, those who were sat­is­fied or very sat­is­fied fell from 82 per cent to 79 per cent

The fall was par­tic­u­larly pro­nounced for sharemilk­ers (down from 77 per cent to 68.5 per cent), al­though that was mainly driven by an in­creas­ing neu­tral per­cep­tion rather than be­ing dis­sat­is­fied.

Per­cep­tions of”un­due pres­sure” rose from 8.1 per cent in Novem­ber to 9.6 per cent, mainly thanks dairy farm­ers (up from 10 per cent to 13.8 per cent, sharemilk­ers ris­ing from 9.7 per cent to 13.5 per cent). That was still less than in 2016, when 20 per cent of sharemilk­ers were feel­ing un­due pres­sure.

Fed­er­ated Farm­ers vicepres­i­dent Andrew Hog­gard said while the av­er­age mort­gage across agri­cul­ture has de­creased in the past six months, it was up from $4.6 mil­lion to $5.1 mil­lion for dairy­ing, the high­est level

to since the sur­veys be­gan Au­gust 2015.

“We need to be care­ful in­ter­pret­ing these fig­ures. It may just be a re­flec­tion of the pro­file of those who took part in the May sur­vey com­pared to Novem­ber par­tic­i­pants,” he said, “but it’s a fact that dairy holds two-thirds of the to­tal agri­cul­tural debt of around $61 bil­lion, and a grow­ing pro­por­tion of that dairy debt is held by highly-in­debted dairy farms.”

He noted that the Re­serve Bank’s six-monthly Fi­nan­cial Sta­bil­ity Report, re­leased last week, con­tin­ued to view dairy debt as a fi­nan­cial sta­bil­ity risk.

“On the pos­i­tive side, the Re­serve Bank ob­served that bet­ter and more sta­ble dairy prices mean most dairy farms are cur­rently prof­itable, al­low­ing some

in farms to re­pay some debt,” Mr Hog­gard added.

“But it warned that dairy farm­ing re­mains highly in­debted and vul­ner­a­ble to any fu­ture down­turn in dairy prices. It iden­ti­fied My­coplasma bo­vis as an emerg­ing risk that has po­ten­tial to neg­a­tively im­pact pro­duc­tiv­ity and prof­itabil­ity, and noted that dairy faces long-term chal­lenges, in­clud­ing the im­pact of re­sponses to en­vi­ron­men­tal con­cerns, such as stricter reg­u­la­tions.”

Mean­while New Zealand Bankers’ As­so­ci­a­tion deputy chief ex­ec­u­tive Antony Buick­Con­sta­ble was pleased the sur­vey showed most farm­ers were still sat­is­fied with their banks.

“Banks work closely with their agri clients, through good times and bad. Keep­ing the lines of com­mu­ni­ca­tion open is crit­i­cal to the on­go­ing suc­cess of farm­ers and their banks,” he said.

Farm­ers’ sat­is­fac­tion with com­mu­ni­ca­tion from their banks re­mained sta­ble at around 74 per cent, with sharemilk­ers the least sat­is­fied.

The sur­vey, con­ducted by Re­search First, also showed in­ter­est rates ap­peared to be “broadly” sta­ble, al­though sharemilk­ers con­tin­ued to pay higher rates than farm own­ers, re­flect­ing the fact that they did not have the same lev­els of se­cu­rity.

Just un­der a third of all re­spon­dents had de­tailed and upto-date bud­gets for the sea­son about to be­gin, but, “as usual,” sharemilk­ers did bet­ter in that re­gard, with two-thirds hav­ing a bud­get in place,” Mr Hog­gard said.

Andrew Hog­gard

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