Banking
Farming has always been reliant on bank capital for investment to grow the farm business, for seasonal finance and in some cases for survival. According to MAF Farm Monitoring Reports, interest is often the largest single farm expense. With agricultural debt at $47 billion, a 1 percent change in interest rates would be worth $470 million to farmers. Banks' decisions can have a huge impact on farm businesses and farming families' economic and social well-being.
Since the global financial crisis erupted in 2008 Federated Farmers has received a number of banking-related complaints from farmers. Although many, probably most, farmers are satisfied with their banks, some are definitely not. Dissatisfaction relates mainly to tighter conditions for both new and existing credit and increasing costs of credit that have been imposed since the global financial crisis.
While most farmers have accepted a return to fundamentals, some have disputed changed conditions with their banks. Based on feedback we have received, farmers feel dissatisfied with existing dispute resolution options. Farmers should have better access to the Banking Ombudsman Scheme.
The Reserve Bank has also been implementing new requirements for bank funding and capital adequacy. Federated Farmers supports measures to strengthen the financial system and ensure that risks are appropriately managed, but aggressive implementation of the changes could be harmful for farming if they significantly increase the cost of credit or restrict its availability. We also want banks to be more transparent in the setting of interest rate margins for rural lending.
Spokesperson
Federated Farmers spokesperson for Banking is National President Bruce Wills. You can contact him at bwills@fedfarm.org.nz.
