Source: MIL-OSI Submissions
Source: Federated Farmers
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.”