Pressure on farmers appears to be easing a little on the back of an improved farming outlook, according to Federated Farmers’ latest Banking Survey undertaken in May 2017 by Research First.
The survey shows that 8.5%of farmers reported coming under ‘undue’ pressure from their bank over the past six months, down from 9.6% in the last survey undertaken in November 2016.
10 percent of dairy farmers reported undue pressure, which is down from 12.8% in November 2016. The drop for sharemilkers is from 15.0% down to 10%.
6.9% of non-dairy farmers (mainly meat and fibre and arable farmers) reported undue pressure, down from 8.2% in November 2016.
“The easing of pressure could be thanks to an improved farming outlook on the back of higher commodity prices since the middle of 2016, most dramatically for dairy but also for meat,” Andrew Hoggard, Federated Farmers’ National Vice President said.
The average mortgage interest rate for respondents was 5.2%, unchanged from November 2016, while the average overdraft interest rate was 7.3%, down from 7.7% in November 2016.
80.7% of farmers reported being very satisfied or satisfied with their bank relationship. This remains stable, down just a little on November 2016’s 81.4% satisfaction. Sharemilkers had the lowest level of satisfaction at 69.5%, but this was up slightly on November.
Satisfaction with bank communication also dipped slightly with 75.9% saying it was excellent or good, down from 77.2% in November. Sharemilkers continue to be the least satisfied at 61.0%, down from 63.0% in November.
66.7% of farmers ended the 2016/17 season with a detailed and up-to-date budget for that season, a similar level as the same time 2017. Meanwhile, 39.3% had both a current-season budget and a detailed up-to-date budget for the upcoming 2017/18 season, again similar to the same time in 2016.
“Dairy farmers and farmers with mortgages are much more likely to have detailed and up-to-date budgets. This shouldn’t be a surprise given that dairy farmers have significantly higher debt levels than other farmers, making robust budgeting much more pressing,” Andrew said.
The New Zealand Bankers Association welcomed the survey results and said it demonstrated the strength of current relations between farmers and their banks.
“The consistently high bank satisfaction rating among farmers reflects the fact that banks are continuing to work closely with their agri clients. It also shows the importance of effective communication between farmers and their banks, and the need to have budgets in place, especially for those managing higher debt,” said Chief Executive Karen Scott-Howman.
Source: Federated Farmers