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Wednesday, 15 January 2020 10:16

Banks partially responsible for dairy debt — Minister

Written by  Staff Reporters
Minister of Agriculture Damien O’Connor. Minister of Agriculture Damien O’Connor.

The Minister of Agriculture has entered the debate on the actions of the banks labelling them as fair-weather friends.

A new report by the Ministry for Primary Industries reveals that more than a quarter of NZ’s dairy farmers have debt to equity ratios of more than 70%. Some have as little as 4% equity in their properties.

The report also reveals that the average debt per hectare on dairy farms is now three times what it was 20 years ago. Read more here.

Minister of Agriculture Damien O’Connor says the debt levels in the dairy industry have been rising for a long time. 

He claims that six years ago the banks indicated they wished to reduce their exposure to agriculture. But were unable to because of low prices in the sector and were forced to back farmers.

O’Connor says in the present crisis, banks need to share some of the responsibility for what’s happened.

“They need to take a partnership approach to the solution and not put all the pressure on farmers. It’s an outrageous excuse on the part of the banks for them to complain about the Reserve Bank asking them to hold a bit more equity in their business – while at the same time creating this pressure on farmers to do the same thing,” he says.

O’Connor says the partnership deal which farms had with the banks must continue but it must be a fair partnership.

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