Tuesday, 21 January 2020 09:55

Dairy debt – the perfect storm?

Written by  Peter Burke
Dairy farmers owe banks over $41 billion. Dairy farmers owe banks over $41 billion.

Federated Farmers vice president, Andrew Hoggard says some dairy farmers are trapped with debt.

His comments come in the light of a recent report from the Ministry for Primary Industries (MPI) stating that about a quarter of NZ dairy farmers have debt to equity ratios of 70% or more: many also face challenging times ahead as government environmental reforms come into effect.

Such reforms MPI says could mean that farmers would have to invest in new infrastructure or make other cost savings on farm such as cutting back on stock numbers.

Hoggard agrees with MPI that the new rules will require changes and says it begs the question of how farmers are going to make such changes in a given time-frame. 

This is happening at a time when many of the major banks are pulling back from agriculture and dairy in particular. 

Hoggard says he’s had calls from farmers who have high debt and are in catchments where very strict rules are going to apply. 

“The banks are not going to want to foreclose on them or anything because if the farm gets sold they are going to lose money,” he told Dairy News.

“But the banks are going to want them to stay there farming and will have their foot their throat the whole time wanting to get their money back. It’s not going to be a helleva lot of fun for the farmers in that situation where all you are doing is effectively being a bank employee. 

“People are feeling like they are trapped - they are not passionate about what they are doing and they are there because they are stuck there,” he says.

Hoggard says this will lead to a whole lot of other issues emerging such as mental health which he says often leads to animal welfare issues and other problems on the farm.

“It’s a perfect storm of a whole lot of things that are interconnected and I don’t have the solution to unpick this whole thing. It does need a lot of thought on how we move from where we are, to where we need to be without screwing up the lives of a whole lot of people,” he says.

More like this

Another win

OPINION: Feds Southland 'pres' Jason Herrick and colleagues who continue the good fight against bureaucratic madness on behalf of farmers, have had another win - for now, at least - getting a court decision granting a 'stay' on rules in the Southland Water and Land Plan until changes can be made to section 70 of the RMA by central goverment, somtheing they clearly signaled after the election.

Court decision a win for Southland farmers

Federated Farmers says it welcomes a recent court decision which granted a stay on rules in the Southland Water and Land Plan until legislative changes can be made by government.

Featured

Pāmu farm opens gate to urban visitors

For many urban New Zealanders, stepping into Pāmu’s Pinta dairy farm near Taupo last month was the first time they had had the chance to experience farm life up close.

National

Machinery & Products

Gong for NH dealers

New Holland dealers from around Australia and New Zealand came together last month for the Dealer of the Year Awards,…

A true Kiwi ingenuity

The King Cobra raingun continues to have a huge following in the New Zealand market and is also exported to…

Data crucial to managing water

Watermetrics was formed as a water data collector and currently supplies and services modern technology such as flow meters, soil…

» Latest Print Issues Online

Milking It

Dairy power

OPINION: The good times felt across the dairy sector weren't lost at last week's Beef + Lamb NZ annual meeting.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter