INDEPENDENT NEWS

Rural Banking Inquiry Essential, Gisborne Farming Leader Says

Published: Fri 7 Jun 2024 03:07 PM
Gisborne-Wairoa Federated Farmers are backing calls for an independent inquiry into rural banking - and they’re asking their local MPs to do the same.
"The number of calls I’m getting from local farmers about banking and financial issues is on the rise," the region’s Federated Farmers president Charlie Reynolds says.
"There’s a lot of belt-tightening going on because of reduced incomes, rising insurance premiums and other cost pressures. It’s a real kick in the guts when farmers learn that banks are charging them significantly higher interest rates than residents and businesses in towns."
Despite the tough time many businesses in New Zealand are facing, and record profit-making by the big banks, "for farming, the banks seem to be pulling back on support.
"I’m aware of one farm where the bank is forcing them to sell, and that’s despite the owner having 70% equity."
Parliament’s Primary Production Select Committee are currently deliberating whether to launch a full probe into rural banking. Reynolds says Tairāwhiti’s farmers want to know that local MPs understand the pressures rural families and businesses are under "and to have confidence they’re doing something to help lift that weight".
As well as probing interest rate discrepancies, how banks treat farmers once their business becomes distressed, and whether there is true competition in the rural banking sector, Reynolds says an independent inquiry needs to investigate banks’ involvement with the Net-Zero Banking Alliance.
"I think it’s a legitimate question whether such greenhouse gas commitments restrict competition and banks’ ability to offer options and financial flexibility to farm clients.
"It seems a bit rich of banks to dictate practices on farm around climate action, when it’s not their area of expertise and when those requirements could reduce food production and farm incomes.
"They’ll surely come down on us when those income cuts compromise our ability to pay back their loans and high interest rates."
MPs should be in no doubt that farmers feel strongly that an independent inquiry is needed, Reynolds says.
The Federated Farmers’ May 2024 Banking Survey showed the number of farmers satisfied with their banking relationship has nose-dived from 80% five years ago to just 51% today.
The survey also found that 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.
"There are clearly some serious issues in our rural banking system that need to be closely looked at and urgently addressed," Reynolds says.

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