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Dairy farmers fear banks will leave them in cold
1
March, 2016
With
some dairy farmers being told their business is no longer viable,
many are concerned banks will not support them through winter.
The
Reserve Bank says dairy farm debt has reached $38 billion and a
recent Federated Farmers poll found more than one in 10 are already
under pressure from banks over their mortgage.
Photo: 123rf
As
little as two months ago Jeff Bruce's bank agreed his 80-year family
farm in South Canterbury was on the right track.
But
just last week, his bank wrote him a letter saying it no longer
considered the business viable and within days he could be forced to
sell it.
His
overdraft has been capped, and Mr Bruce said he now faced a $50,000
to $80,000 shortfall over the next three months, leaving him with no
option than to sell stock.
"There's
potentially quite good gains to be made over the next three or four
or six months, but those gains won't be made if we sell those animals
in particular now.
"We
will be forced essentially into selling livestock at a much lower
level than what could be obtained in another four or five months
time."
Mr
Bruce expanded into dairy in April 2014. At the time farmers were
receiving record payouts above $8 per kilogram, but he budgeted the
farm to work on just $5 per kilo.
He
said the farm was doing better than anticipated, but the current
payout was closer to $4 per kilo and he had a multimillion-dollar
mortgage to pay off.
"Unless
we reach some sort of a resolution in the next week or two they will
be looking - they never ask you to sell, they just look for some form
of capital repayment which is effectively selling."
Minister
for Primary Industries Nathan Guy has insisted the banks would stand
by farmers, but one North Island dairy farmer RNZ News spoke to said
she was scared of the banks.
Nathan
Guy. Photo: RNZ
/ Alexander Robertson
She
said the minister needed to stop meeting with banks, and start
meeting with farmers.
Her
farm was staying afloat but only because they had cut staff, and
family members had extra jobs off the farm.
She
feared a repeat of 2008, when she and her husband bought more
farmland but just two months later were forced by the bank to sell
it, well below the purchase price, plus pay several hundred thousands
of dollars in break fees.
"A
lot of farmers are scared to speak out because of repercussions from
the banks," she said.
"The
banks have a lot of power in farming. In hard times they can cut your
overdraft, they can cut your cashflow, they can do a lot, they can
make it very tight. In 2008 a lot of farmers that I know walked away
with just the ute and the clothes they wore."
David
Polglaze had $3 million in equity when he bought his Bay of Islands
dairy farm in late 2006.
It
was soon regarded a benchmark of good practice by his bank. Now, he
and his wife live in a caravan.
The
end for the farm came in 2012 when, hit by drought and extra costs,
he had his working capital cut by $100,000 overnight.
With
their multimillion-dollar mortgage attracting a 9.2 percent interest
rate, he said the bank had forced him to sell.
"You
know it is pretty sad out there and there'll be a lot of people that
won't be able to perhaps handle what we've handled and they'll take
their life, that's the sad part," he said.
Mr
Polglaze said farmers should talk to their neighbours and be ready to
ask for help.
Related
Academy to create NZ's next generation of dairy farmers
1
March, 2016
A
new Dairy Academy has officially been opened to help create New
Zealand's next generation of dairy farmers.
Casey
Mieklejohn, a dairy academy student Photo: Supplied
Nine
students have enrolled in the one-year training programme at the
Ariki Dairy Unit in the Wairakei District near Taupo.
The
programme is a joint venture between Shanghai Pengxin Group (SPG) and
Landcorp Farming Limited.
Students
will live in housing on nearby Landcorp or Shanghai Pengxin farms and
combine classroom study provided by Taratahi Agricultural Training
Centre with practical application of learning on the Ariki dairy
farm.
Landcorp
chief executive Steven Carden said the new training facility will
contribute to the development of future dairy farm leaders in New
Zealand.
"Landcorp
is committed to the development of young talent in New Zealand's
agriculture sector and the Dairy Academy will sit beside Landcorp's
other investments in training programmes across the country."
The
programme is fully funded by the Shanghai Pengxin/Landcorp joint
venture so will be free for all participating students, he said.
Students
will also be encouraged to gain casual employment with Landcorp on
its nearby dairy farms, primarily in study breaks.
The
programme has been designed to provide mid-level leadership
development for ambitious people who already have some level of
technical skill or knowledge of dairying, said Mr Carden.
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