Farmer satisfaction with their banks is dropping, and more are feeling under financial pressure, according to a new survey.
The Federated Farmers November Banking Survey shows while 73.7 percent of the 750 farmers who responded said they were satisfied or very satisfied with their bank, that was a drop of 5 percent since the previous survey in May.
It’s also the lowest satisfaction level recorded in any of the 10 surveys conducted since 2015.
Federated Farmers Economics and Commerce spokesperson Andrew Hoggard said the results show a need for renewed efforts to improve relationships between farmers and banks.
"It also underlines the fact that farm debt mediation - voluntary ideally, but mandatory if necessary - would be a useful tool in the tool kit," he said.
Bank satisfaction levels remained steady, at 69 percent for sharemilkers.
One factor may be that average interest rates for sharemilkers dropped from 5.8 percent to 5.3 percent, bringing them closer to the average rate for all farm types, at 5.2 percent.
Dairy farmers, who have the largest mortgages by dollar value, on average experienced a drop in their total dairy debt of about $375,000 to $4,686,000. But for sharemilkers, averages mortgages went from $1,022,000 to $1,299,000 in the last six months.
As a group, more farmers (11.6 percent) reported feeling "undue pressure" from their banks than at any time since August 2015, though that was only a 2 percentage point rise between May and November.
However, the average increase in that feeling of undue pressure from dairy farmers went up 4.4 percent in the six month period, and for sharemilkers it was even higher, at 5.5 percent.
It means nearly a quarter of sharemilkers now feel they are under undue pressure.
"An increase in pressure may seem counterintuitive considering dairy farmers’ incomes and profitability have been recovering after the 2014-16 downturn," said Mr Hoggard.
"Banks generally stood by their dairy clients during that downturn and allowed them to increase debt to get through, but hardly surprisingly, now that times are better - notwithstanding a recent drop in milk prices - banks want farmers to pay debt down."
New Zealand Bankers’ Association Acting Chief Executive Antony Buick-Constable said that while the overall result is down, he is pleased that most farmers remain satisfied with their bank.
"Our banks stand by their agri clients in good times and bad," he said.
"That was particularly evident during the dairy downturn, it makes sense for farmers to have a look at their financial management in better times," said Mr Buick-Constable.
He said the association has previously looked at introducing a clearer farm debt mediation framework, and is looking forward to working with the government on this initiative.
The survey was carried out by Research First.
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