Banks sticking by rural clients, says Fed Farmers

The latest LaWF report recommendations could have significant implications for farmers throughout New Zealand.

Banks are still standing by their farmer customers, according to a Federated Farmers survey.

Federated Farmers said its latest banking survey showed an unchanged level of farmer support for banks over the past three months, with 80.5 per cent of respondents satisfied with banks regarding mortgages compared to 80.7 per cent in the first survey, conducted in August.

The Federation's second banking survey, which covered 1,100 respondents, was conducted in late November. High levels of farm debt have been cited by the Reserve Bank as a risk to New Zealand's financial system.

In the central bank's latest financial stability report, the bank noted that the dairy sector faced its second year of weak cash flows, due to low international dairy commodity prices.

"Dairy prices have recovered since August, but some indebted farms are likely to come under increased pressure over the coming year, which could be exacerbated if dairy farm prices fall significantly," the Reserve Bank said in its November report.

Federated Farmers said its survey found that a slight drop in satisfaction with the communication from banks over their mortgages, from 81.0 per cent to 78.8 per cent, while the percentage of farmers feeling they had come under undue pressure from their bank increasing from 5.5 per cent to 6.4 per cent.

Those seeking support with their budget from an accountant was up from 38.7 per cent to 43.2 per cent, but banks remain the most common source of external advice and assistance on budgeting at 50.7 per cent, up from 49.5 per cent.

There's been a slight drop in satisfaction from farmers over the communication from banks over their mortgages, from 81.0 per cent to 78.8 per cent.

"This has been a difficult few months for our farmers, particularly in the dairy industry, so it is extremely pleasing to see the banks are standing by them," Federated Farmers president William Rolleston said.

"We're staring down the barrel of an El Nino summer and it seems there are more difficult months ahead for the dairy industry, so we need these high levels of support to continue," he said in a statement.

New Zealand Bankers' Association chief executive Kirk Hope said that with the potential impact of El Nino, banks were working to ensure farmers were aware of the measures available across the sector, and would continue to provide assistance "according to the particular circumstances involved".