High interest forces #farmers off land

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Farm lobby group says those ‘set up to fail’ may take class action against major banks.
 
Aggressive lending practices by the major banks have forced 30 Northland farmers off their land in the past 18 months through mortgagee sales, according to a Dargaville-based lobby group.
 
Farmers of New Zealand, an alternative to Federated Farmers, said a meeting planned for March would raise the possibility of aggrieved farmers taking a class action against the banks.
 
John Waugh, a barrister and former banking executive, will advise farmers on their rights, said Farmers of NZ’s operations director, Bill Guest.
 
He expected the meeting to take place soon after the Northland Agricultural Field Days at Dargaville from February 27 to March 1.
 
Guest said 25 to 30 farmers had walked off their land over the past 18 months and he expected the number to reach 40.
 
Drought in parts of Northland and Kaipara had made matters worse for many farmers, he said.
 
In many cases farmer debt loads had been unrealistically high and the banks’ risk analysis procedures had been «seriously lacking».
 
«Farmers of NZ believes that they were set up to fail, and some people have lost their shirts.»
 
He said the norm for farm lending was for debt servicing to be about 25 per cent of gross income. In some cases, debt servicing was as high as 100 per cent, and in one case 114 per cent – «a lot of it on the back-of-cigarette-packet lending».
 
The meeting was also likely to cover the controversy surrounding interest rate swaps.
 
«The meeting will be an opportunity for farmers to come along and talk to specialist solicitors to see what their rights are,» Guest said.
 
According to the Ministry for Primary Industries, rural sector debt is spread unevenly among farmers, with about half held by just 10 per cent of dairy farmers.
 
The Reserve Bank, in its latest financial stability report, said parts of the rural sector were highly indebted and the dairy sector, in particular, was vulnerable to a fall in commodity prices or an increase in debt servicing costs.
 
The central bank said a return to pre-2007 credit growth and spending patterns in the sector would present risks to the country’s financial stability.
 
Last December, the Commerce Commission announced that it intended to take ANZ, ASB and Westpac banks to court over sales of interest rate swap loans to rural customers.
 
Since starting its investigation, the commission has received over 140 complaints and contacts about the sale of swaps.
 
So far, commodity prices have been going well for dairy farmers.
 
New Zealand is well on the way to a record year for dairy production, thanks to near-ideal grass-growing conditions.
 
Last December, Fonterra maintained its forecast payout farm gate milk price at $8.30 a kg of milk solids for 2013/14, which would exceed the previous record of $7.60 in 2010/11.
 
Source: NZHerald
 

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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