Manawatū-Rangitikei Federated Farmers gets behind banking inquiry push

Federated Farmers says concern about rural banking is the number-one issue it is hearing about from members.

Manawatū-Rangitikei Federated Farmers is backing calls for an independent inquiry into rural banking - and asking local MPs to do the same.

Manawatū-Rangitikei Federated Farmers president Ian Strahan said concerns about rural banking were the number-one issue the organisation was hearing about from local members.

“Many of our local farming families are struggling to make ends meet with reduced incomes, rising interest rates and other cost pressures weighing heavily. Farmers want to know our local MPs understand the pressures we are under and to have confidence they’re doing something to help lift that weight.”

He said an independent inquiry into rural banking should be a non-partisan issue politicians from across the spectrum could get behind and support.

“Supporting an independent inquiry into rural banking won’t cost them a thing, but it would mean the world to our local farming families who are really hurting.”

Strahan said farmers were “asking some really fair questions, and I think they deserve some straight answers”.

“In particular, I think an inquiry needs to consider whether there is enough true competition in our rural banking system, and how banks treat farmers once their business becomes distressed. There also needs to be a very close look at things like the Reserve Bank’s capital requirements and the effect they are having on the interest rates farmers pay.”

He said those rules were amongst the toughest in the world and seemed to be adding significant costs behind the farm gate.

Federated Farmers’ May 2024 Banking Survey showed the number of farmers satisfied with their banking relationship has nose-dived from 80 per cent five years ago to 51 per cent today.

The survey also found a record-high number of farmers feel they have come under undue pressure from their banks.

“Alarmingly, only one in five farmers feel they have been adequately supported by their banks during this time of high interest rates. We’ve been hearing some real horror stories since Federated Farmers started banging the drums calling for an independent inquiry.”

Strahan said that ranged from young farmers who were struggling to get a foot in the door right through to older farmers who had faced huge pressure to sell their farms.

“We’ve even heard that, in some cases, farmers have been encouraged by their bank to use their overdraft to pay down their loan principal. There are clearly some serious issues in our rural banking system that need to be closely looked at and urgently addressed.”

Parliament’s Primary Production Select Committee is currently deliberating whether to launch a full probe into rural banking.

On the opening morning of Fieldays on Wednesday, Federated Farmers launched a petition putting pressure on the Government to announce an independent inquiry into rural banking.