Farmers' overdraft interest rates may have fallen by the same amount as wholesale interest rates, but they still don't reflect cuts to the Official Cash Rate (OCR). Federated Farmers third interest rates survey revealed farm business overdraft interest rates have fallen by an average of 2.68 percentage points since December last year. Meanwhile, the OCR has been cut by 4 percentage points. More than 225 Federated Farmers members responded to the survey, which was conducted between 26 May and 2 June 2009. "The Reserve Bank is looking to cut the OCR again tomorrow and Federated Farmers would be comfortable with a drop," says Phil York, Federated Farmers Economics and Commerce spokesperson. "But it doesn't really matter if a cut is made or not, the real issue is, when will these cuts filter through to farm businesses? "Add to this the drop in milk powder prices, the rise of dairy subsides off shore and high on-farm inflation costs and it becomes clear our most productive sector is being squeezed from all angles. "Parliament's Finance and Expenditure Committee (FEC) yesterday also criticised the banking sector for not passing on the full interest rate cuts," Mr York added. The FEC stated it is "vital that banks neither insulate their profit margins nor charge excessively high interest rates at the expense of the real economy and taxpayers".
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.