“I’m aware of one farm where the bank is forcing them to sell, and that’s despite the owner having 70 per cent equity.”
Parliament’s Primary Production Select Committee has been deliberating whether to launch a full probe into rural banking.
Reynolds said Tairāwhiti’s farmers want to know that local MPs understand the pressures rural families and businesses are under “and to have confidence they’re doing something to help lift that weight”.
“As well as probing interest rate discrepancies, how banks treat farmers once their business becomes distressed, and whether there is true competition in the rural banking sector, an independent inquiry needs to investigate banks’ involvement with the Net-Zero Banking Alliance.
“I think it’s a legitimate question whether such greenhouse gas commitments restrict competition and banks’ ability to offer options and financial flexibility to farm clients.
“It seems a bit rich of banks to dictate practices on farm around climate action, when it’s not their area of expertise and when those requirements could reduce food production and farm incomes.
“They’ll surely come down on us when those income cuts compromise our ability to pay back their loans and high interest rates.”
MPs should be in no doubt that farmers feel strongly that an independent inquiry is needed, Reynolds said.
The Federated Farmers’ May 2024 Banking Survey showed the number of farmers satisfied with their banking relationship has nose-dived from 80 per cent five years ago to just 51 per cent today.
The survey also found that a record-high number of farmers feel they have come under undue pressure from their banks.
“Alarmingly, only one in five farmers feel they have been adequately supported by their banks during this time of high interest rates.
“There are clearly some serious issues in our rural banking system that need to be closely looked at and urgently addressed.”