It seems more and more farmers are becoming disappointed in their banks as Federated Farmers’ latest survey revealed that farmers’ satisfaction with their banks in the last six months has continued to drop while the number of those who feel pressure from banks has jumped from 16% to 23%.
The latest Federated Farmers Banking Survey has found that most farmers still remain “satisfied” or “very satisfied” with their banks, but the number giving those ratings has dropped from 71% in May this year to 68% in November.
Andrew Hoggard, economics and commerce spokesperson for Federated Farmers, pointed out that the figure was the lowest since they began the twice-a-year surveys in August 2015.
“This is disappointing but not at all surprising given what we have been hearing over the past several months of banks getting tougher and changing conditions as they seek to contain or even reduce their exposure to agriculture, and also as they respond - prematurely - to the Reserve Bank’s proposals on bank capital,” Hoggard said.
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Bank scenarios where farmers feel under pressure included new or increased margins, shifting from fixed to floating interest rates or vice versa, selling assets to repay debt, requiring principal and interest to be paid, and more information or security being required.
Arable had the highest percentage of farmers feeling under pressure from their banks (30%) and the lowest percentage feeling very satisfied or satisfied (60%). However, the group also had the highest proportion feeling neutral.
“This might reflect a combination of some poor to average recent harvests, competition from cheap imported grain reducing demand and prices, and the fact arable farmers, because of the very nature of their businesses, have very lumpy farm incomes and thus need bigger overdraft facilities compared to other farm types. Banks generally want to see overdrafts reduced," Hoggard said.