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Southland Feds call for MP support for rural banking inquiry

The Southland App

07 June 2024, 4:43 AM

Southland Feds call for MP support for rural banking inquirySouthland Federated Farmers president Jason Herrick. Photo: Supplied

Southland Federated Farmers (FFS) are calling on the region’s MPs to throw their support in behind the organisation’s calls for an independent inquiry into rural banking.


FFS president Jason Herrick said rural communities were really hurting at the moment and banking issues are their number one concern.


"Banks are making record profits but many of our farming families are struggling to make ends meet, with rising interest rates and low payouts."



"Farmers want to know our local MPs understand the pressures we’re under and that they’re doing something about it."


Herrick said that supporting an independent inquiry into rural banking should be a ‘no brainer’ for any rural politician, no matter their political stripe.


"We aren’t sitting here asking for a handout. We’re just asking for Parliament to take a closer look at our rural banking system to make sure farmers are getting a fair deal."



Herrick said they were hearing some real horror stories about the way farmers are being treated by their banks this season.


"Farmers’ confidence and willingness to invest is really being knocked by questionable bank tactics and profit gouging, and it will end up costing our local economy."


Parliament’s Primary Production Select Committee are currently deliberating whether to launch a full probe into rural banking.



"The reports are that MPs from both sides of the House have not been particularly impressed with the answers they’ve been getting from the banks," Herrick said.


"The committee can be in no doubt just how farmers are feeling. We need Parliament to stand up and ask those tough questions - and to get us some answers."


The Federated Farmers’ May 2024 Banking Survey showed the number of farmers satisfied with their banking relationship has nose-dived from 80% five years ago to just 51% today.



The survey also found that a record high number of farmers feel they have come under undue pressure from their banks


"The feedback I’m getting from Southland farmers is clear: they expect this inquiry to go ahead," Herrick said.


"They want to know why their interest rates are so high compared to those living in town, and how the banks are able to justify that."



Herrick said he was also concerned by some of the personal stories that are emerging.


"I’m hearing of some farmers who are paying between 11% and 18% on their overdrafts, which is completely outrageous."


"In some cases, farmers have been encouraged by their bank to use their overdraft to pay down their loan principal, so they’re suffering that double whammy on interest."


"There is clearly something broken in our rural banking system. Farmers are asking some fair questions, and I think they deserve some answers."



Invercargill MP Penny Simmonds said the government understood the critical role banking played in rural communities and recognised the challenges faced by farmers.

 

“An investigation into rural banking practices is to be undertaken, and we are committed to ensuring a thorough review to address these concerns effectively,” she said.


Southland MP Joseph Mooney said National was aware of concerns in our rural and farming communities about banking services.


"The Government is already committed to a Select Committee inquiry into general banking issues and we’re now actively considering how we might widen this to ensure issues specific to the rural and farming sectors are included,” he said.



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