PM concern about farm debt anxiety

Prime Minister Jacinda Ardern has warned bankers to be aware of the anxiety debt is causing farmers across the country.

Her warning comes as the Farm Debt Mediation Bill is set to pass its third reading before Christmas.

The new law will require secured creditors who lend money to farmers to offer mediation before taking enforcement action if farmers default on payment.

It follows caution, from Arbitrators’ and Mediators’ Institute executive director Sue Wells, who told Stuff that financial pressure on the rural sector can not be underestimated and it’s only likely to get worse.

Ardern told a Dairy NZ Environment Leaders’ Forum yesterday that she recently met with the New Zealand Bankers’ Association and discussed rural lending.

Afterwards she told Stuff that in her view there had been an increase in debt across the rural sector.

‘‘This has placed huge pressure on rural communities. I am of the strong view that banks need to be mindful of that and the anxiety it creates.’’

She told farmers at the forum that the theme of the conference, supporting communities and embracing change, was spot on.

She told them she put humanity first in many aspects of the work she did and that included the rural sector.

‘‘The health and wellbeing of rural sectors is something that I consider constantly. As a nation we are facing some considerable challenges.’’

She told the forum she wanted to reduce anxiety in the rural sector and wanted to keep New Zealand’s brand and that would be a big challenge.

‘‘I can’t say we will get it right or perfectly the entire time but anything I can do to try and bring everyone with us and say, we know this is hard and we have got your backs. We are really trying to get rid of the rural/urban divide, to try and get rid of that debate of blame and scaremongering. I will do everything I can on that.’’

New Zealand Bankers’ Association chief executive Roger Beaumont said banks worked closely with any agricultural customers who were experiencing financial issues.

‘‘That’s reflected in the low number of mortgagee sales in the sector. There are around 52,000 farms in New Zealand and fewer than 10 mortgagee sales a year.

‘‘We also support the Farm Debt Mediation Bill. That will bring an independent view to help farmers and banks work through any financial difficulties.

‘‘We encourage good two-way communication between farmers and their banks, especially when things get difficult.’’

Federated Farmers economics and commerce spokesman Andrew Hoggard welcomed the progress of the Farm Debt Mediation Bill and looked forward to the Reserve Bank announcement of changes to bank capital requirements today.

‘‘Not only because it will provide some certainty but hopefully also to ease cost and pressure on farmers by, for example, extending the transition period from the proposed five years to something like 10 years.’’

Last week a Federated Farmers banking survey showed that in the past six months farmers’ satisfaction with their banks continued to erode.