NZ Farm Worker Pay Growth Slows After Post-Pandemic Boom
According to the latest Federated Farmers-Rabobank Farm Remuneration Report, released today, farm worker pay growth has levelled off after a post-Covid period of rapid growth.
Nearly 1,400 farmers took part in the Federated Farmers May 2020 Banking Survey.
Of that number, those feeling ‘satisfied’ or ‘very satisfied’ with their bank lifted slightly from 68% to 69% during the past six months. While farmers feeling ‘under pressure’ dropped from 23% to 19%.
"Satisfaction had slipped as a trend since we started this twice-yearly survey in August 2015 and this is the first positive change since then," says Federated Farmers vice-president Andrew Hoggard.
He says farmers have been battling widespread drought and the COVID-19 pandemic fallout over the past few months, adding to financial pressures.
Hoggard believes the apparent alleviation of some of this pressure may be attributed to banks being actively encouraged by the Government to support lending during the economic downturn through measures like the Business Finance Guarantee Scheme. The Reserve Bank has also delayed implementing its tougher bank capital requirement, again to help banks support lending.
"This approach has probably also spilled over into rural lending even though farming has been less badly affected by COVID-19 than most other sectors of the economy," he says.
As with the November 2019 survey, arable farming is the group with the highest percentage of farmers feeling under pressure (28%, down from 30% in November). They also have the lowest percentage feeling very satisfied or satisfied (58%, down from 60% in November).
Meat and wool farmers are relatively more satisfied than most other groups (72% feeling very satisfied or satisfied) and they are also less likely to be feeling under ‘undue pressure’ (13%).
"Another positive result from the survey is that average interest rates both for mortgages and for overdrafts have come down by 0.4% each, so it would seem that recent OCR cuts have been passed on,” Hoggard adds. “It will also reflect people who have re-fixed at lower rates after a few years at higher fixed rates."
The average mortgage rate is now 4.2% and the average overdraft rate is 6.6%.
