Govt shares farmer concerns on high interest rates - McClay

McClay says he's closely watching the parliamentary primary production select committee as it takes briefings from stakeholders including Federated Farmers. The committee will then decide whether an inquiry should be held into rural bank lending.

"Farmers are feeling the pinch as a direct result of high interest rates, as a direct result of the previous Government's reckless spending," he told Dairy News.

"We certainly share their concerns."

McClay says, after the briefings, the committee will make the call on whether an inquiry should be held into rural bank lending.

Federated Farmers is pushing for an independent inquiry into rural bank lending.

"Rural banking issues are nearing crisis point and farmers are quickly losing confidence," Federated Farmers commerce and competition spokesperson Richard McIntyre says.

"Things have clearly gone from bad to worse, with consecutive surveys showing all the key metrics we track heading in the wrong direction.

"We thought the results were bad in our last survey, six months ago, but farmers are now feeling even more miserable about the state of rural lending."

Federated Farmers last week released the results of their latest banking survey conducted from May 3-15, 2024 with 642 responses from across New Zealand.

"The record profits banks have been making for the last few years have been well-publicised, but there are a few other records being broken that we want to shine a light on," McIntyre says.

"Farmers' satisfaction with their banks has dropped five points to its lowest levels since our surveys began in May 2015.

"Six years ago, around 80% of farmers were satisfied with their bank, but that number has since plummeted to just 51%."

A quarter of farmers held a neutral view, while those saying they were 'dissatisfied' or 'very dissatisfied' increased to 23.6% - a new record high.

"Alarmingly, we also have one in four farmers reporting they have come under undue pressure from their bank," McIntyre says.

"These aren't just statistics. These numbers represent real Kiwi farming families who are clearly under huge pressure from high interest rates, rampant inflation and reduced incomes."

Given the increased scrutiny of rural lending in recent times, Federated Farmers added a new question to their recent survey.

They asked: 'Do you think New Zealand banks are presently demonstrating a positive commitment to support farming through difficult periods of high interest rates?'

McIntyre says it's incredibly disappointing that only one in five farmers responded with a 'yes' to that question.

"At a time when farmers are really struggling, I would have hoped to see our banks stepping up to help, but instead they seem to be tightening the screws.

"These figures are of real concern and add considerable weight to Federated Farmers' calls for an independent inquiry into rural banking.

"There are clearly some widespread issues in our rural banking system that need to be closely looked at and addressed - urgently."