Pressure on farmers eases

Andrew Hoggard

The number of farmers coming under "undue" pressure from their banks has eased slightly on the back of an improved farming outlook.

Federated Farmers' latest banking survey, completed in May, showed 8.5% of  farmers surveyed reported coming under undue pressure over the past six months, down from 9.6% in the previous survey in November.

It came on the back of higher commodity prices since the middle of last year, most dramatically for dairy but also for meat, Federated Farmers national vice-president Andrew Hoggard said in a statement.

Ten percent of dairy farmers reported undue pressure, down from 12.8%, while the drop for sharemilkers was from 15%  to 10%. Among non-dairy farmers (mainly meat and fibre and arable farmers), 6.9% reported undue pressure, down from 8.2% in November.

The average mortgage interest rate for respondents was unchanged at 5.2%, while the average overdraft interest rate was 7.3%, down from 7.7% in November.

Sharemilkers had the lowest level of satisfaction with their bank relationship at 69.5%, but that was up slightly on November.

The proportion of farmers ending the 2016-17 season with a detailed and up-to-date budget for that season was 66.7%, similar to the level at the same time last year.

Meanwhile, 39.3% had both a current-season budget and a detailed up-to-date budget for the upcoming 2017-18 season, again similar to the same time last year.

Dairy farmers and farmers with mortgages were much more likely to have detailed and up-to-date budgets. That should not be a surprise, given that dairy farmers had significantly higher debt levels than other farmers, making robust budgeting much more pressing, Mr Hoggard said.