Farmers’ satisfaction with their banks continues to slip, and more feel they are being placed under undue pressure, the latest Federated Farmers Banking Survey shows.
Although the majority of the 1017 respondents in the May survey remain satisfied with their banks, with 56% very satisfied or satisfied, this was down three points from the previous survey in November 2022 – and is the lowest since the biannual surveys began in May 2015.
“Interest rate and cost increases are making it tough for many New Zealanders and businesses and the rural sector isn’t immune,” Federated Farmers president Wayne Langford said.
“But the survey results indicate the banking sector has work to do lifting the standard of their liaison and service to the agricultural sector.”
Many respondents were complimentary about their banking relationships, but others highlighted the size and speed of interest rate increases on top of continued concern about banks’ tough lending policies for rural purposes.
“Also mentioned was less frequent communication, bank branch closures and consolidation of rural staff into larger centres more remote from rural areas, high turnover of bank staff and staff having less understanding of farming,” Langford said.
Arable farmers were the most satisfied of industry groups, and sharemilkers were the least satisfied, with barely half saying they were very satisfied or satisfied.
Twenty-four percent of farmers said they felt they had come under undue pressure from their banks over the past six months, up six points from November 2022. For this measure, all industry groups had higher proportions compared to six months ago, and all were over 20%.
Dairy farmers felt the most under pressure and meat and wool farmers felt the least pressure.
Some 44% of farmers felt their mental wellbeing had been affected by their debt levels, interest rates, changing conditions, or other forms of pressure, up three points from six months earlier.
“With banks making healthy profits, we don’t want them to be forgetting our rural communities and suggest reinvestment in extra customer service at this time,” Langford said.
“When times are tough, good communication is even more important, but our May survey shows farmer satisfaction on that front has slipped a bit more, continuing the decline of the last five years.”
Other key survey results:
• 79% of farmers said they had a mortgage, up two points from November 2022. Over the past six months, the average farm mortgage value has increased from $4.19 million to $4.31m, while the median increased from $2.50m to $2.80m.
• The average mortgage interest rate increased from 6.29% to 7.84%, up 155 basis points since November 2022 (and up 405 basis points since its lowest point in May 2021). Sharemilkers had the highest average, of 8.41%.
• Overall, 2.1% of farmers were paying a mortgage interest rate of less than 5%, down from 10.1% in November 2022 (and from a peak of 91.5% in May 2021). Meanwhile, 1.8% were paying a rate higher than 10%, compared to 0.3% in November 2022.
