Farmers' satisfaction with banks has dipped, Fed Farmers says

Friday, 4 June 2021

Stu and Francine Murray have a lot of work ahead of them, but they're pleased they didn't lose stock when heavy rain caused flooding at their property near Sheffield in Canterbury.

Five years ago, eight in 10 farmers were happy with their bank.

That’s slipped to just six in 10, and bank branch closures are the single biggest cause for concern in rural communities.

Federated Farmers has released its latest survey of farmer satisfaction with their banks, which involved polling more than 1100 farmers in May.

In all, 71 per cent of farmers said they were concerned about bank branch closures, with 42 per cent of them saying they needed branches to carry out their business.

* Rural communities should get a piece of the infrastructure pie, Federated Farmers says

* New Zealand arable farmers face unfair competition from imported grain

But their concern was not only for themselves. A total of 56 per cent said they were worried about the impact of closures on their local communities, Federated Farmers said.

“Provincial towns are under all sorts of pressures, with workforce gaps, farms jobs disappearing as productive land is planted out in pines for carbon credits, competition from online sales trends that all traditional retailers face, to name some of the factors,” Federated Farmers president Andrew Hoggard said.

“Bank branch closures are just another hit on confidence, making doing business in rural areas that much harder, and another reason for young people to look to cities for their future when agriculture is the main way New Zealand earns its living in the world,” he said.

Westpac’s half-year results showed it had dropped from 151 to 134 branches in a year.

The farmer survey is run every six months. It showed 62 per cent of farmers were satisfied with their bank relationship, down from 66 per cent in November.

Hoggard said there had been a continuation of steady erosion in satisfaction over the past five years, from more than 80 per cent.

It appeared that dairy farmers were the least likely to be satisfied with their banks, while meat, wool and arable farmers were the most satisfied.

Just under one in five farmers felt under pressure from their banks, the survey revealed.

“Just on 18 per cent of farmers said they’d been feeling under pressure from their banks, down half a point on six months ago, so that’s stable. Arable farmers are feeling the most pressure, when in earlier surveys of late it has been dairy farmers,” Andrew said.

Federated Farmers found that 58 per cent of farmers said communication with their bank has been good or very good, down from over 60 per cent six months ago.

Dairy farmers may not be the biggest fans of banks, but they are feeling under less pressure from them than they were six months ago, Federated Farmers says.

“As with overall relationship satisfaction, that sentiment has been eroding steadily over recent years,” Hoggard said.

The withdrawal of cheques, which has been supported by government agencies, has been a bone of contention with around one in 20 farmers.

“Five per cent of respondents said they use cheques and don’t have easy access to alternatives,” Hoggard said.

“I would suspect a reflection of poor internet connectivity in their locality,” Hoggard said.

Many farmers are heavily indebted with 79 per cent of farmers having a mortgage with an average value of $4.3 million. The median value of farm debt was $2.2m.

Arable farms had the biggest average and median mortgages, even bigger than dairy farms, Federated Farmers said

In addition, 78 per cent of farmers had an overdraft with an average value of $193,000, with the median overdraft being $100,000. Arable farms also had the biggest average and median mortgages.

Slightly more farmers said it had become harder to get new lending than it was six months ago, than said it had become easier.

The average mortgage interest rate was 3.8 per cent down from 3.9 per cent in November, but around 9 per cent of farmers had mortgage rates over 5 per cent, Federated Farmers found.