Tuesday, 05 June 2018 09:51

Farmers feeling the pressure — survey

Written by 
Federated Farmers vice-president Andrew Hoggard. Federated Farmers vice-president Andrew Hoggard.

More farmers are feeling under financial pressure, and satisfaction with their banks has slipped, the May 2018 Federated Farmers’ Banking Survey shows.

The biannual survey drew 1,004 responses, more than double that of the last survey in November. 

While results indicate the vast majority of farmers are still satisfied with their banks, those saying they were ‘very satisfied’ or ‘satisfied’ fell from 81% to 79% since November.

The fall was particularly pronounced for sharemilkers (68.5% satisfaction, down from 77%) although for them the drop was mainly driven by more of them having a neutral perception rather than being dissatisfied.

Perceptions of ‘undue pressure’ have also picked up, from 8.1% in November to 9.6% in May. The increase is mainly down to dairy, where the increase was from 10% to 13.8% (with sharemilkers rising from 9.7% to 13.5%). However, this pressure is still less than experienced in 2016 when one in five sharemilkers felt undue pressure.

Just on 15% of arable farmers reported feeling under more pressure from their bank, but there were only 46 respondents from that sector.

Federated Farmers vice-president Andrew Hoggard said while the average mortgage across agriculture has decreased in the past six months, it’s up from $4.6 million to $5.1m for dairy - the highest level since the surveys began in August 2015.

"We need to be careful interpreting these figures. It may just be a reflection of the profile of those who took part in the May survey compared to November participants.

"But it’s a fact that dairy holds two-thirds of the total agricultural debt of around $61 billion, and a growing proportion of that dairy debt is held by highly-indebted dairy farms."

It’s worth noting the Reserve Bank also released its six-monthly Financial Stability Report this week and continues to view dairy debt as a financial stability risk.

"On the positive side, the Reserve Bank observed that better and more stable dairy prices mean most dairy farms are currently profitable, allowing some farms to repay some debt," Hoggard says.

"But it warned dairy farming remains highly indebted and vulnerable to any future downturn in dairy prices. It identified Mycoplasma bovis as an emerging risk that has potential to negatively impact productivity and profitability, and noted that dairy faces long-term challenges, including the impact of response to environmental concerns, such as stricter regulations."

New Zealand Bankers’ Association Deputy Chief Executive Antony Buick-Constable was pleased the survey showed most farmers remain satisfied with their banks.

"Banks work closely with their agri clients, through good times and bad. Keeping the lines of communication open is critical to the ongoing success of farmers and their banks," Buick-Constable says.

The survey, conducted by Research First, also showed interest rates appear broadly stable, although sharemilkers continue to pay higher rates than farm owners, reflecting the fact they don’t have the same levels of security as farm owners.

Just under a third of ‘all farms’ reported having detailed and up-to-date budgets for the season about to begin but as usual sharemilkers did better in that regard, with two-thirds having that budget in place.

Farmers’ satisfaction with communication from their banks remained stable at around 74%, with sharemilkers the least satisfied.

 

More like this

MPI’s behaviour on M. bovis beastly

Farmers affected by Mycoplasma bovis need help and support, but MPI treats them as guilty parties, claims Mid-Canterbury Federated Farmers dairy chair Chris Ford.

Goalposts shift

The farming sector has engaged in the national effort to draft a credible response to climate change so New Zealand is seen internationally to be doing its bit.

Climate change consultation was ‘a farce’

Federated Farmers Waikato president Andrew McGiven believes animal numbers would have to be effectively halved to meet the 2050 target set by the Government's new Zero Carbon Amendment Bill.

No choice but to cull

Only by culling cows would New Zealand achieve the methane emission targets set by the Government unless there was a major breakthrough in science, says Federated Farmers national vice-president Andrew Hoggard.

 
 

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Nice

Fonterra has copped a fair bit of stick from the Hound over the years. However, on this occasionyour old mate…

No idea

A mate of the Hound reckons it is rather ironic – and totally appropriate – that the failing Australian-owned and controlled…

 
 

» Connect with Rural News