-
Source: ONE News -
Watch Video
-
Related
Banks are starting to move in on some "under stress" dairy farmers, particularly those that have borrowed heavily.
Tim Fulton from New Zealand Farmers' Weekly says the National Bank is transferring some customers to debt management services, which suggests the possibility of mortgagee sales.
"Debt is a poor formula to have brewing at the moment and it's moved beyond just a financial strain," he says.
Fulton says banks have been lending "pretty freely" for the past five to 10 years, particularly in the dairy sector, but are now taking action.
"It may just be a note to a dairy farmer that they should perhaps sell that beach house, sell that boat, sell all those extra little frills that they've garnered in the last few years," he says.
Fonterra's forecast milk payout now stands at $5.10 per kilo of milk solids after hitting a record $7.90/kilo last season, and farmers face a tough few months ahead.
"This is real crunch time coming up for dairy farmers coming up to terminal tax time just in the next few weeks," he says.
"They're also going to have to deal with payment of those Fonterra fair value shares over the next couple of months at the very time the their incremental farm payments dry up for two or three months."
But despite the outlook, farmers are not bailing out of Fonterra.
Fonterra says cease notifications for new supply going into the new season are down around 40%.
"Fonterra's line on it is perhaps people are seeking some security in being part of a big co-op," says Fulton.
Fulton also says farm sales appear to be down on this time last
year.
