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Published: 2010-04-28 00:00:00

Banks must provide cash-strapped farmers with at least enough finance for stock feed and generally support them through Waikato’s drought, says Peter Buckley, chair of the Waikato Regional Drought Committee.

Mr Buckley, who also chairs regional council Environment Waikato, was commenting after yesterday’s committee meeting, which had invited five of the main rural lenders along to discuss drought-related financial issues. Only one banking representative, National Bank’s northern regional manager Stuart Ewing, turned up, although the Bank of New Zealand invitee sent apologies.

"Confirmation yesterday, following our meeting, of a higher Fonterra payout forecast is good news for dairy farmers. But I have been hearing comment from farmers generally that banks are tightening their purse strings in the current tough conditions and one of my main concerns is that they tighten up so much that it starts to affect animal welfare," said Mr Buckley.

"We must look after our animals properly for their sake and for the future viability of farms. Banks, whose rural loans are paid back from farming receipts, could be shooting themselves in the foot if they don’t extend enough credit to keep animals healthy and productive for the future."

The meeting heard from Hauraki’s mayor John Tregidga who said there was widespread concern in his district about the financial circumstances farmers were finding themselves in during the drought. He outlined a scenario of a young couple struggling with their high interest rate debts to the Bank of New Zealand, due to accumulated problems exacerbated by the dry conditions.

Mayor Tregidga suggested being more flexible on the interest rate charged would be a big help. "What does the bank have to lose by giving these people a chance?" He said the BNZ case was not an isolated one and was disappointed only one of the big banks had turned up to the meeting.

Discussion during the meeting noted a range of farmers, contractors and sharemilkers were having financial and other problems due to the drought. Waikato Rural Support Trust chairman Neil Bateup said callers to his organisation’s freephone number included "older people who never thought they’d ring a helpline in their lives". The trust was still getting about 15 calls a day.

But, on top of the calls for banks to be more flexible, it was acknowledged at the meeting that farmers needed to be proactive about contacting their lenders if they were having financial problems.

The National Bank’s Mr Ewing said after the meeting that the National Bank was committed to helping farmers get through the drought. "The National Bank lent farmers $2 billion over the last year to keep many afloat through the global financial crisis and we are committed to continuing to work with farmers to help them through this drought."

At the meeting, Mr Ewing agreed to take a leadership role amongst lenders and facilitate and chair a sub-committee of banks and other professionals to look at the farmer financial issues involved. It will report back to the drought committee.

Mr Buckley said that, depending on what the finance sub-committee came up with, one option was for a Waikato local government delegation to approach the Minister of Agriculture in Wellington about how banks were dealing with drought-affected farmers.

"The committee intends to keep a very close watch on this issue and I am prepared to take things up at the highest level possible if we feel the banks aren’t doing enough to be flexible in the difficult circumstances currently prevailing."

Mayor Tregidga also suggested councils might have a role to play in easing farmers financial pressures by making some provision around rates payments.

The Rural Support Trust’s contact number is 0800 787 254.