Federated Farmers Banking Survey May 2018
The May 2018 survey is the ninth iteration of the survey, which is conducted biannually typically in May and November of each year. The survey was conducted for Federated Farmers by Research First, New Zealand's leading agricultural market research company.
The Banking survey is designed to investigate the level of satisfaction and support the farming industry is receiving from their respective bank(s). Measures in this report include interest rates, finance rates, amount of undue pressure, and the quality of information received from their bank(s). Other topics explored include the robustness of farmers' approaches to aspects of financial management, such as budgeting now and in the future.
Key Summary
- Farmers' overall satisfaction remains strong, although satisfaction has dropped below 80% for the first time since the survey began (August 2015). As a group, sharemilkers are less satisfied with their banks than six months ago
- Most farmers have a mortgage. Dairy farms (87%) are more likely to have mortgages compared to non-dairy farmers (66%)
- Over the past six months, the average farm mortgage has increased, but only for dairy farms (average $5.1million) with just under two-thirds of dairy farmers holding mortgages over $2million. Dairy farms continue to hold the largest proportion of mortgages over $20million likely reflecting the increased borrowings for expansion over the past decade. Mortgage values for non-dairy farms reduced during the same period (average $2.1million)
- Mortgage rates have remained stable at an average of 5.4% since November 2016. Sharemilkers continue to be subjected to the highest interest rates (average of 5.8%).
- Most farms have an overdraft facility (average limit of $214,000), that has increased over the past six months (from $192,000 in November 2017). Non-dairy farms have the largest overdraft facilities (average of $222,000)
- Just under three-quarters of farmers feed under the same pressure from their banks as six months ago but dairy farmers (particularly sharemilkers) are feeling under increased pressure. The most noticeable changed conditions have occurred in the dairy industry.
- Satisfaction with bank communication continues to be stable with three-quarters of farmers ranking their bank's communication as more than good.
- Having an up-to-date budget is most prevalent amongst sharemilkers, most of whom have a detailed budget for the future season as well
For more information - see the full report