Jan farm sales slump to lowest in 7 years

Total farm sales in NZ slumped more than a third to 46 in the month of January from the same month a year ago, Real Estate Institute (REINZ) figures show.REINZ President Peter McDonald said it was "most alarming" that only 7 dairy farms were sold in the 'prime' month of January and he cited weak bank lending rather than a lack of demand from buyers reported The NZ Herald . "There is confidence amongst buyers in the rural sector and a lot of interest in farms, but there appears to be a distinct lack of confidence from lenders," he says. Reserve Bank figures show bank lending to farms dropped NZ$315 million to NZ$46.916 billion between the end of September and the end of December. This was the first fall in agriculture lending in 9 years. The Reserve Bank warned banks last year about lending too much to the farming sector and many of the rural banks have tightened their lending criteria in the last six months, partly because the banks are more exposed to farming debt and because of an international push for banks to hold more capital and be less leveraged. This is the end result of the need internationally to de-leverage economies, including NZ's. Interest.co.nz understands that National Bank and Rabobank, two of the largest rural lenders, are reducing their agriculture lending. Only BNZ, and to a lesser extent ASB, are still growing rural lending. Westpac had also slowed lending growth in the wake of its exposure to Crafar Farms' receivership, banking sources have told Interest.co.nz. Rabobank also lent to Crafar Farms. Responding to an earlier report that Westpac had stopped lending growth, Westpac Public Relations Manager Liz MacIntyre said Westpac was still growing its rural lending. "We're very clear that we see the industry as a focal point for the New Zealand economy, and we have recruited an extra 20 agribusiness managers over the last year. Our message over the last year has consistently been that we're open for business, and we've communicated that constantly to the rural sector," MacIntyre said in emailed comments