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The November 2024 Federated Farmers Banking Survey has delivered some concerning findings about the state of rural banking in New Zealand. As your trusted accounting partners, we wanted to share these insights and discuss what they mean for farming businesses across the country.

The Numbers Tell a Worrying Story

The latest survey of over 600 farmers reveals that satisfaction with banking relationships has hit a new low. Only 53% of farmers surveyed reported being satisfied with their current banking relationship – a dramatic drop from the 80% satisfaction rate recorded in 2017.Perhaps more concerning is that one in four farmers (25%) reported feeling undue pressure from their banks over the past six months. For sharemilkers, this figure jumps to 35%, highlighting the particular challenges faced by this sector.

The Human Cost of Banking Stress

Beyond the numbers, the survey reveals a troubling human impact. A third of farmers (33%) reported that their mental health and wellbeing had been negatively affected by their interactions with banks. This statistic underscores how banking relationships extend far beyond simple financial transactions – they directly impact the lives and families of rural communities.Communication challenges also persist, with only 55% of farmers rating their bank's communication as good or very good. Clear, responsive communication is essential when dealing with the seasonal and cyclical nature of farming operations.

Not All Banks Are the Same

The survey results show significant variation between banking providers. Rabobank stands out as the clear leader in farmer satisfaction, achieving a 70.1% satisfaction rate while holding 23% of the rural banking market. Both Rabobank and ANZ received higher ratings for their flexibility in helping farmers structure their debt arrangements.These differences suggest that the challenges aren't inherent to rural banking itself, but rather reflect varying approaches and policies across different institutions.

What This Means for Your Farm Business

Review Your Banking Relationship: If you're experiencing pressure or poor communication, know that you're not alone. The survey results validate what many farmers are feeling, and there are options available.Understand Your Position: Having clear, up-to-date financial statements and cash flow projections can strengthen your position in banking discussions. We work with clients to ensure their financial position is clearly presented and understood.Know Your Options: The survey results show that some banks are performing significantly better than others in serving rural clients. It may be worth exploring your options if your current relationship isn't meeting your needs.Document Everything: Keep records of all banking communications and decisions. This is particularly important if you feel pressure or unfair treatment.

Looking Ahead

The survey results have contributed to ongoing calls for a banking inquiry, with Parliament's Finance and Expenditure Committee currently examining banking practices. This scrutiny may lead to positive changes in how banks serve rural communities.Additionally, proposed legislation by MPs Andy Foster and Mark Cameron could prevent banks from making lending decisions based on environmental or emissions criteria rather than commercial grounds. The survey found that 70% of farmers support such measures.

How We Can Help

At CMK Accountants we understand the unique challenges facing rural businesses in the current banking environment. We can assist by:

• Preparing comprehensive financial reports that clearly demonstrate your farm's performance and position
• Developing cash flow projections to support lending discussions
• Providing independent financial analysis to help you understand your options
• Offering guidance on structuring debt arrangements effectively
• Supporting you through banking negotiations or transitions

While these survey results paint a challenging picture, they also highlight the importance of professional financial management and advocacy. Farmers deserve banking relationships built on understanding, flexibility, and mutual respect.If you're experiencing banking challenges or want to strengthen your financial position for future discussions, we're here to help. Our experience with rural businesses means we understand both the farming cycle and what banks need to see to maintain confidence in their rural lending portfolio.The farming sector remains vital to New Zealand's economy, and with the right financial management and banking partnerships, farms can continue to thrive despite current perceived banking challenges.