Federated Farmers Vice-President Andrew Hoggard said it was a positive
that levels of bank satisfaction among sharemilkers had improved to be
close to the industry average “as sharemilkers do represent the next
“Some sharemilkers had been under quite a bit of financial pressure in
the recent past but a shout out to them for working hard to get good
financial processes in place. It’s great to see they have such high
levels of budgeting.
“As usual though, farming isn’t plain sailing. With particularly dry
conditions quite early on in the summer, it’s going to be important that
if conditions get worse farmers are making pro-active decisions on the
financial implications, and keeping accountants and bank managers in the
New Zealand Bankers’ Association chief executive Karen Scott-Howman was
pleased that overall bank satisfaction among farmers remains
“It shows that banks are continuing to work closely with their agri
clients. That’s not surprising given the high level of bank support for
the agri sector,” she said.
“Constructive relationships are essential in helping to deliver good results for both farmers and their banks.”
Four of five respondents to the survey have a mortgage, with the average
across all farms increasing slightly since May from $3.1m to $3.2m.
Dairy farms (89.7 per cent) and sharemilkers (97 per cent) are more
likely to have mortgages than non-dairy farms (71.8 per cent).
Mortgage interest rates have been stable (average 5.2 per cent) and no
respondent was paying more than 10 per cent mortgage interest, which is
the first time since the survey began in May 2015.
Farming is a very seasonal business, with revenue often volatile. Just
on 85 per cent of farms have overdrafts, at an average limit of
$192,000. Overdraft interest rates are declining slowly, and the
proportion of farmers paying over 10 per cent interest has decreased
from 14.8 per cent in May 2015 down to 3.7 per cent in November 2017.
Andrew said it was encouraging that only a small minority farmers feel
that they have come under undue pressure over the past six months and
it’s also encouraging that this proportion (currently 8 per cent) has
been easing back over the past 12 months.
The survey found that currently around 60 per cent of farms have an
up-to-date, detailed budget for the current season. This proportion is
particularly high for sharemilkers, at 90 per cent, with non-dairy
farmers somewhat less likely to have budgets.
“Although currently low, we expect the proportion of farmers to have
budgets for next season to increase as the season progresses,” Andrew