Editorial: Time for rural banking inquiry

The Federated Farmers’ Banking Survey also unveiled that farmer satisfaction with their bank is at a record low.

While the new farmer-friendly Coalition Government has done a few good things for the agriculture sector as part of its 100-day plan, farmers are eagerly waiting for more, and on top of the list is an independent inquiry into rural banking.

According to Federated Farmers, of the farmers surveyed, 25.8% felt they’d come under ‘undue pressure’ from their bank over the previous six months, up 2% from May to a new record high. Although 55.6% remain satisfied or very satisfied with their banking relationship, this was down 0.7% from the last survey in May - a record low since the survey began in May 2015.

Richard McIntyre, Federated Farmers domestic commerce and competition spokesperson, says the results add weight to the call for an independent inquiry into rural banking.

Many farmers commented in the survey that their dissatisfaction was due to interest rates being too high - and much higher than those for residential borrowers.

The average mortgage interest rate in the survey was 8.26%, up from 7.84% in May 2023, and a big jump from its lowest point of 3.79% in May 2021. Meanwhile, the average overdraft interest rate increased from 10.07% in May to 10.52% in November, up from a record low of 6.28% two years earlier.

Farmers claim that the banks seem to be charging far higher interest rates for farm lending than for home loans.

Farmers deserve to know why farm lending rates are so much higher than the rate on offer for things like urban home loans.

Only an independent rural banking inquiry will provide them an answer.