Rural banking: Federated Farmers welcomes probe into interest rates

Federated Farmers has been calling on the Government to carry out an independent inquiry into rural banking since September 2023. Photo / Brett Phibbs

By RNZ

Federated Farmers is claiming a major win, with the Primary Production Select Committee starting an investigation into rural banking.

The lobby group has been calling on the Government to carry out an independent inquiry into rural banking since September, claiming farmers are paying much higher interest rates than their urban counterparts.

A survey the group did of farmers in May last year found farmer satisfaction with their banks was at an all-time low, and the number of farmers reporting they had come under undue pressure from their bank was at an all-time high.

National board member Richard McIntyre said it was good to see politicians were doing something about the problem.

“While it may not be a full-scale inquiry just yet, it is a really positive first step forward that will allow members of Parliament to take a much closer look at the issue.

“I’m hopeful that once they get their heads under the hood and start looking around, they’ll be able to see where things aren’t operating as well as they could be, and get to work sorting it out.”

It was still very early days, and Federated Farmers was yet to see the terms of reference, but it would definitely engage in the process, McIntyre said.

Rural lender Rabobank said rural interest rates were high as local regulatory settings required them to be.

“Banks are required to hold a significantly greater proportion of capital against rural lending than for residential lending, and any comparison of rural and residential interest rates should take this difference into consideration.

“That being said, we are supportive of any process that improves the transparency of agribusiness lending and the key variables which influence lending interest rates in the sector.”

- RNZ