‘Get Adrian Orr to stop punishing rural New Zealand’, Federated Farmers tells MPs

Wednesday, 19 February 2025

Federated Farmers' Richard McIntyre gives MPs his recipe for getting farmers a better deal from banks.

“Get Adrian Orr to stop punishing rural New Zealand with overly conservative risk settings,” Federated Farmers’ banking spokesperson has told MPs holding a parliamentary banking inquiry.

The farming sector group’s lobbying led to the launch of the banking inquiry, and it was given 45 minutes on Wednesday to lay out its complaints.

Its number one call was for the Government to get the Reserve Bank Te Pūtea Matua to ease capital settings that currently mean it is cheaper and more profitable for banks to pour money into urban home loans, rather than lend to farmers.

“Farmers with generations of equity behind them, proven track records and productive businesses [are] being treated as riskier than a graduate buying a town house at 5% deposit,” Richard McIntyre said.

He told MPs about a southern farmer who told Federated Farmers that, despite having 80% equity, was being offered higher interest rates than their recent graduate child buying their first home in town.

Oliver Ibbetson, Richard McIntyre and Paul Melville from Federated Farmers tell MPs that farmers with 90% equity in their businesses are treated as more risky by banks than new graduates taking out a home loan with 10% equity.

The Reserve Bank’s capital requirements were among the toughest in the world, McIntyre said.

“That’s really absurd, if we want our economy to grow,” he said.

“Farmers are paying higher rates than someone borrowing against a house in Wellington, and we’ve seen how that is working.”

Banks lending to rural businesses had grown by a tiny amount, while urban mortgage lending had risen sharply.

But it also revealed another industry that is no longer in favour with all banks: rural firearms shops.

BNZ made headlines late last year for its plans to lend to petrol retailers, and Shane Jones, Minister for Resources, was so outraged to find a coal miner that no bank would finance it resulted in New Zealand First tabling proposals for law changes to prevent banks from making moral judgments when making loans to businesses engaged in legal activities.

But Paul Melville, Federated Farmers’ general manager for policy and advocacy, told MPs: “We had a gun store approach us in the middle of last year.

Farmers need guns to protect pests, but at least one bank is not keen to lend to shops that sell guns.

“They had just lost their banking services because of a decision by the bank to get out of that industry. That was a service rural people needed to manage pests on their farms,” Melville said.

Wednesday’s hearing came after Federated Farmers called for banks to pull out of the United Nations’ Net-Zero Banking Alliance, and protested some big banks having different emissions reductions targets for New Zealand farmers, while their Australian parent banks had set lower, or no targets, for Australian farmers.

BNZ was demanding an 11% reduction by 2030 from farmers in New Zealand, but its owner National Australia Bank did not have the same targets for its Australian farmers.

“In fact, they haven’t set any emissions reductions at all,” McIntyre said.

Last year Federated Farmers asked the Commerce Commission to investigate banks’ membership of the UN’s Net-Zero Banking Alliance, claiming that all the big four Australian banks and Rabobank being members had resulted in co-ordinated behaviour affecting rural lending.

The Net Zero Banking Alliance is a global club of banks aligned in a United Nations project to transition the world to a zero emissions economy.

McIntyre expected banks to start exiting the alliance soon, following major US and Canadian banks.

“We will be celebrating that achievement,” he said.

ACT MP and dairy farmer Mark Cameron asked McIntyre if having all major banks, or their parent companies, being members of the alliance was incompatible with the Government’s aim of doubling rural exports in the next 10 years.

“I can’t see how it can be compatible,” McIntyre said.

Green and Labour MPs challenged Federated Farmers on pushing back against banks’ decisions to choose to factor climate change into their lending decisions.

“We’re not wanting banks to pretend climate change is not real,” McIntyre said.

Green co-leader Chlöe Swarbrick questioned Federated Farmers’ representatives on why they didn’t think banks should be allowed to factor climate risk into their lending decisions.

But Federated Farmers wanted banks to be genuine and supportive in helping farmers invest in technologies to improve environmental outcomes on their farms.

Labour MP Deborah Russell asked Federated Farmers to stop using the “clobber word” woke.

“Would you be more comfortable with virtue-signalling,” McIntyre said.

Melville said when big banks in the US and Canada pulled out of the Net-Zero Banking Alliance, it indicated they were never genuine in joining but had been following political fashion.

MPs heard the results of Federated Farmers’ October banking survey indicated farmers continued to be discontented with banks.

It found 40% of farmers were ready to switch to Kiwibank if it started rural lending.

But it also found many felt trapped with their current bank as other banks were reluctant to grow their rural lending books, or take on riskier farming loans. Federated Farmers said 10% of farmers had sought to change banks, but found they were unable to.

“A lot of farmers find themselves stuck with a bank, with no ability to change,” McIntyre said.

In those instances they were captive to higher interest rates, and at risk of being encouraged to sell up, and leave the industry.