Federated Farmers has put together a submission on the state of rural banking, which includes the views of 1100 farmers from across the country.
Farmers’ views on rural banking will be heard loud and clear in Parliament next week when Federated Farmers shows up for the banking inquiry.
“For years, farmers have felt like second-class customers in New Zealand’s banking system,” Federated Farmers banking spokesperson Richard McIntyre says.
“It’s time for that to change, and we’re heading to Wellington on Wednesday to demand a fair deal from the banks.”
“When we get in front of the inquiry this week, we’ll be speaking up for those farmers and many more, taking their concerns directly to the people who can change the banking system for the better,” McIntyre says.
“Farming families up and down New Zealand are feeling under significant pressure from their banks and wondering why they’re being unfairly targeted.”
While urban borrowers enjoy competitive rates, rural businesses are hit with higher costs, tougher lending rules, and fewer options, McIntyre says.
“Banks talk about ‘risk’ but they seem to be taking fewer risks on the people who produce our food.
“When farmers are doing well the whole country does well, so lenders should be supporting our farmers to innovate and grow – not holding them back.”
Federated Farmers has led the charge against unfair banking practices for the past 18 months, calling strongly for an inquiry.
“That fight that has paid off, with the Government announcing last June it would proceed with an inquiry,” McIntyre says.
“But the hard work still needs to be done – we need this inquiry to lead to actual long-lasting changes to the banking system.”
McIntyre says Federated Farmers’ submission this week isn’t just a list of complaints.
“It’s a roadmap for change. Farmers aren’t asking for special treatment – they’re asking for a fair go.”
He says one of the biggest issues Federated Farmers will raise is capital requirements, the rules determining how much money banks must hold when they lend to different industries.
“New Zealand’s rules are some of the toughest in the world, which means banks charge farmers more to borrow.
“We estimate rural borrowers are paying up to 1.7% more in interest than they should be. Even a 1% drop in farm lending rates would put $625 million a year back into rural New Zealand.
“That’s money reinvested in jobs, local businesses and on-farm improvements, driving rural economies and flowing through to suppliers, services, and New Zealand GDP growth.”
Federated Farmers has raised this directly with Finance Minister Nicola Willis, who has written to Reserve Bank Governor Adrian Orr, asking him to review risk-weighted assets for agricultural lending.
“That’s a direct result of our advocacy,” McIntyre says.
“But a letter isn’t action yet. Hopefully, Adrian Orr will respond by actually doing something positive for rural New Zealand.”
Another concern Federated Farmers will raise this week is the risk of de-banking – banks refusing to lend to businesses that don’t fit their climate targets.
BNZ has already told rural petrol stations they won’t be financed beyond 2030 due to the Net-Zero Banking Alliance, and the bank’s carbon targets.
“Our concern isn’t just about today’s loans,” McIntyre says.
“If the banks are quietly tightening lending criteria now, what will they be like in five years? Will farmers need to prove their emissions reductions just to refinance a mortgage? Will whole industries be blacklisted because they don’t meet an overseas target?”
McIntyre says he’s been pleased to see New Zealand MPs taking action on banking, even though the inquiry is still underway.
“Not only has Minister Willis written to Adrian Orr, but we’ve also seen Minister Shane Jones responding to the issue of debanking.
“We 100% support his private Members’ Bill to stop banks from de-banking customers for ideological reasons.”
Another key concern is the need for great competition in the banking sector.
“Farmers don’t have enough options,” McIntyre says.
“Federated Farmers’ survey found 40% of farmers would consider switching to Kiwibank if it offered farm loans.
“That’s a strong message: if the big banks won’t step up, maybe it’s time to back a bank that will.”
McIntyre is confident the banking inquiry will lead to good results for farmers.
“Federated Farmers fought hard for this inquiry, and it’s starting to show signs of paying off.
“There’s still work to be done but momentum is building.
“Farmers are finally being heard.”
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