A survey for Federated Farmers shows over a quarter of farmers feeling under pressure from banks while overall satisfaction levels with the banks have dropped

A survey conducted by lobby group Federated Farmers shows that over a quarter of the country's farmers are feeling "excessive and undue pressure" from their banks, while overall satisfaction levels with the banks have dropped.

The latest twice-yearly Federated Farmers Banking Survey, which has been conducted since 2015, and with the latest survey attracting 947 responses, adds weight to the call for an independent inquiry into rural banking, Fed Farmers say.

Of the farmers surveyed, 25.8% felt they’d come under 'undue pressure' from their bank over the previous six months, up 2% from May to a new record high.

Although 55.6% remain satisfied or very satisfied with their banking relationship, this was down 0.7% from the last survey in May - and was a record low since the survey began in May 2015.

Richard McIntyre, Federated Farmers domestic commerce and competition spokesperson, says the numbers of farmers feeling they had come under undue pressure was "a real concern".

"Farmers are already under huge financial and mental pressure with high costs, falling commodity prices and extreme weather events. As if that wasn’t bad enough, now they also feel like they’re getting a raw deal from their bank.

"This is exactly why Federated Farmers has been calling on the Government to support an independent inquiry into rural banking, so farmers can have confidence the banking systems are operating in a fair and proper way."

McIntyre says many farmers commented in the survey that their dissatisfaction was due to interest rates being too high - and much higher than those for residential borrowers.

The average mortgage interest rate in the survey was 8.26%, up from 7.84% in May 2023, and a big jump from its lowest point of 3.79% in May 2021.

Meanwhile, the average overdraft interest rate increased from 10.07% in May to 10.52% in November, up from a record low of 6.28% two years earlier.

"The banks seem to be charging far higher interest rates for farm lending than for home loans, which is raising eyebrows in farming households across the country," McIntyre says.

"Many also said their high interest rates are being imposed at a time when banks were reporting record profits.

"Farmers deserve to know why farm lending rates are so much higher than the rate on offer for things like urban home loans."

Those high rates and other factors have left farmers with an appetite for an independent inquiry too, McIntyre says.

"That came through loud and clear in the responses. There was concern about the state of competition in rural lending and some blamed the impact of regulation, such as bank capital requirements and risk weightings. "Some also expressed concern about banks pushing for reductions in farms’ greenhouse gas emissions."

The survey found 44.3% of farmers felt their mental wellbeing had been affected by their debt levels, interest rates, changing condition, or other forms of pressure. This is up 0.7% from May 2023.

McIntyre said that one positive from the survey was an improvement in perceptions about communication - breaking a run of declines over the past five years - with just under 57% saying their bank communications had been very good or good.

"Even so, concern about high interest rates is overwhelming any warm fuzzy feelings about the quality of communication."