Farmers are feeling slightly more satisfied and less
under pressure from their banks, the Federated Farmers May
2020 Banking Survey shows.
Responses to Research First
from nearly 1,400 farmers found that the number feeling
‘satisfied’ or ‘very satisfied’ with their bank
lifted slightly from 68% to 69% in the past six months, and
those feeling ‘under pressure’ dropped from 23% to
19%.
“Satisfaction had slipped as a trend since we
started this twice-yearly survey in August 2015 and this is
the first positive change since then,” Federated Farmers
Vice-President and commerce spokesperson Andrew Hoggard
says.
It has been tough for many farmers in the last
few months, with widespread drought and the pandemic
fallout. Banks have been actively encouraged by the
Government to support lending during the economic downturn
through measures like the Business Finance Guarantee Scheme.
The Reserve Bank also delayed implementation of its tougher
bank capital requirement, again to help banks support
lending.
“This approach has probably also spilled over
into rural lending even though farming has been less badly
affected by COVID-19 than most other sectors of the
economy,” Hoggard says.
As with the November 2019
survey, Arable is the group with the highest percentage of
farmers feeling under pressure (28%, down from 30% in
November) and they also have the lowest percentage feeling
very satisfied or satisfied (58%, down from 60% in
November).
Meat & Wool farmers are relatively more
satisfied than most other groups (72% feeling very satisfied
or satisfied) and they are also less likely to be feeling
under ‘undue pressure’ (13%).
“Another positive
result from the survey is that average interest rates both
for mortgages and for overdrafts have come down, by 0.4%
each, so it would seem that recent OCR cuts have been passed
on. However, it will also reflect people who have re-fixed
at lower rates after a few years at higher fixed
rates.”
The average mortgage rate is now 4.2% and the
average overdraft rate is 6.6%.
“There are significant
challenges ahead, with the drought persisting, winter feed
stores under significant pressure and uncertain global
trading conditions, to name a few. Fortunately, the Farm
Debt Mediation Scheme will come into effect on 1 July,”
Hoggard says.
“As in the past, our survey underlines
how important it is for banks to treat their customers
fairly and for farmers and banks to be proactive in their
communications.”
