Source: Federated Farmers
More than one in five Kiwi farmers say their bank isn’t allowing them to structure their debt in the most interest-efficient way.
That’s a key finding put forward by Federated Farmers in its recent submission to Parliament’s banking inquiry.
“New Zealand farmers are clearly under huge pressure from the banks because we had more than 1000 farmers come forward to share their frustrations with us,” Federated Farmers banking spokesperson Richard McIntyre says.
“We’ve used that feedback in our submission, leaving the select committee in no doubt about what farmers are dealing with and how banking issues are affecting them.”
McIntyre says it’s highly concerning to hear so many farmers (22%) haven’t been allowed to structure their debt to minimise interest payments as much as possible.
“We also had another 18% of farmers tell us they’re unsure of their options.
“In total, 40% of farmers either find their debt structure inefficient or aren’t receiving the information they need to improve it.
“That’s something we need this inquiry to sort out – and fast.”
McIntyre says another recurring theme in feedback from farmers is the lack of transparency and the one-size-fits-all approach banks take to lending.
One significant issue is the pressure farmers feel to use overdrafts to manage debt repayments or fund capital projects – tasks overdrafts were never intended for.
In fact, 12% of farmers say their bank has asked them to fund capital work using an overdraft.
“This is unacceptable,” McIntyre says.
“Overdrafts are designed for managing seasonal cash flow, not to burden farmers with higher-interest debt, which only serves to boost bank profits.”
He says many farmers are stuck in overdraft facilities that never return to positive balances, with banks reluctant to offer more sustainable solutions.
This creates a cycle of high-interest debt, leaving farmers financially strained over the long term.
“This isn’t just bad practice – it’s bad faith,” McIntyre says.
“Banks are prioritising profits over the long-term financial health of New Zealand’s farmers.”
He emphasises that overdrafts should be a tool, not a trap.
Farmers have reported that, even when it makes good business sense, they’re unable to convert overdraft debt into term debt.
“The advantage for the bank is that overdrafts generate higher interest, and banks can call in the debt at any time,” McIntyre says.
“This practice leaves farmers vulnerable, with overdraft rates often 3-4% higher than term debt.”
Federated Farmers is calling for banks to provide fair access to more efficient debt structures, particularly term debt, which would allow farmers to plan for the long term.
“Farmers aren’t asking for special treatment,” McIntyre says. “We just want a fair go.”
Federated Farmers has been instrumental in securing an initial briefing on rural banking, led by the Primary Production Committee.
This has now developed into a full inquiry into banking competition, led by Parliament’s Finance and Expenditure Committee.
Federated Farmers will ensure farmers’ perspectives are taken seriously, pushing for real changes in New Zealand’s banking system, McIntyre says.
He says Federated Farmers is incredibly grateful to the thousands of farmers who shared their experiences as part of the submission process.
“Farmers want change, and they’ve added significant weight to our submission.
“Their voices are the backbone of this submission, and they’ve given us the momentum we need to keep pushing for real solutions.”
Federated Farmers is now preparing to present its oral submission to Parliament.
“We’re not just here to highlight the problems,” McIntyre says. “We’re here to advocate for real solutions that will make a difference for every farmer in New Zealand.”
“We’re 100% committed to ensuring the banking inquiry delivers meaningful change for rural banking.
“We won’t stop until every farmer has access to banking that is fair, efficient, and on our terms.”
