Concern about branch closures can be added to the continued slide in farmers’ satisfaction with their banks, the latest Federated Farmers Banking Survey shows.
More than 1,100 farmers responded to the May survey and 71% of them said they were concerned about bank branch closures. Of those who were concerned, 42% said they needed branches to carry out their business and 56% were worried about the impact of closures on their local communities.
“Provincial towns are under all sorts of pressures, with workforce gaps, farms jobs disappearing as productive land is planted out in pines for carbon credits, competition from on-line sales trends that all retailers face, to name some of the factors,” Federated Farmers President and commerce spokesperson Andrew Hoggard says.
“Bank branch closures are just another hit on confidence, making doing business in rural areas that much harder, and another reason for young people to look to cities for their future when agriculture is the main way New Zealand earns its living in the world.”
The six-monthly survey, run with the help of Research First, found 62% of farmers are satisfied with their bank relationship, down 4 points on November and a continuation of steady erosion in satisfaction over the past five years, when it was over 80%. Meat & wool and arable farms are the most satisfied, ‘other industry groups’ least satisfied.
“Just on 18% of farmers said they’d been feeling under pressure from their banks – that’s down half a point on six months ago, so that’s stable. Arable farmers are feeling the most pressure, when in earlier surveys of late it has been dairy farmers,” Andrew said.
Some 58% of farmers said communication with their bank has been good or very good, down 4 points on November. As with overall relationship satisfaction, that sentiment has been eroding steadily over recent years.
The May survey also threw in a question about banks phasing out cheques. Five percent of respondents said they use cheques and don’t have easy access to alternatives; “I would suspect a reflection of poor internet connectivity in their locality,” Andrew said.
Another 61% said they don’t use cheques but are concerned about people who don’t have easy alternatives; 34% are ‘not concerned’.
Other findings:
- 24% of farmers say their lending conditions have changed over the past six months, down 3 points on November. Of those with changed conditions, 14% were tougher and 10% easier.
- Average mortgage interest rate was 3.8% down from 3.9% in November. 91% are paying mortgage interest rates of less than 5%.
- Average overdraft interest rate was 6.3%, down from 6.4% in November. 20% are paying overdraft interest rates of less than 5%.
- 79% of farmers have a mortgage with an average value of $4.3 million and median value of $2.2 million. Arable farms had the biggest average and median mortgages, even bigger than dairy farms.
- 78% of farmers have an overdraft with an average value of $193K and median value of $100K. Arable farms also had the biggest average and median mortgages.
- ANZ had the biggest market share for both mortgages and overdrafts.
- Farmers most satisfied with Rabobank and Westpac.