Banks are believed to be taking an increasingly harder look at their farming clients’ debt and equity positions fuelling concerns that some dairy farmers won’t be able to enter the coming season without their backing.

There has been one receivership sale in Northland and a number of other property owners are working through their financial situation with their banks, Northland Rural Support Trust co-ordinator Julie Jonker said.

At least five operations were in that position.

They tended to be dairy farms and on Northland’s west coast, despite a good growing season throughout the region with plentiful summer rain.

“Their financially strained circumstances have been exacerbated by the two years of low dairy payouts,” she said.

In some instances farmers bought land 10 years ago at the peak of the market. While they had so far been able to keep up with interest payments, equity in their properties had dropped.

With one sharemilking client the bank involved withdrew its support even though they had done everything asked of them, she said.

“And there’s more than one in that situation.”

In other cases permission from banks to spend money on what their clients felt was essential farming outgoings had been denied.

“One bank wouldn’t support their clients putting on urea at the right time,” she said.

“That’s where you need someone who understands farming because that has an impact on the whole season.”

The trust has a number of facilitators, usually retired farmers, who act as a medium between banks and farmers.

“The facilitators act as a translator,” Jonker said.

Farmers are operating at a very emotional level when they meet with their banks in this situation so facilitators can offer not only support but help each side understand the other’s point of view.

She felt banks had been very careful through the 2015-16 downturn in dairy payouts knowing there was nothing to be gained by forcing farm sales.

“But now things have stabilised and some seem to be taking a hard look at their portfolios,” she said.

“It’s sad that these things happen.”

She believes in some instances banks will not provide finance for some clients for the coming dairy season even if Fonterra signals a considerably higher payout than the present $6.40 a kilogram of milksolids farmgate. But with some banks having different lending criteria it could be possible another bank would pick up that farmer, which had happened in the past.

If farmers felt they had been unfairly dealt with they could approach the Banking Ombudsman as well as the trust.

The trust held 15 wellbeing days at Farm Source stores late last year where over three weeks representatives spoke to more than 90 dairy farmers. Their major concerns were lack of trained farm labour and the amount of bureaucracy they had to deal with, both of which contributed to their stress load. And they were also feeling keenly the results of dirty dairying attacks made during the election campaign.

“In some cases their kids were bullied at school,” she said.

Countering that perception was not a job for the trust but lobby groups like Federated Farmers.

The Northland Trust is planning more wellbeing events in March and April then Welcome to the District functions in June in which it hopes to team up with local community groups to spread its message to the widest possible audience.

Bankers’ Association chief executive Karen Scott-Howman said the banking industry understands how important the primary sector is to New Zealand and its economy.

Banks work closely with their agri clients through good times and bad.

“The good relationship between farmers and their banks is reflected in Federated Farmers’ banking satisfaction survey which consistently finds high levels of satisfaction among farmers,” she said.

“Banks work very hard with customers who find themselves in financial difficulty.”

Farmers who are having trouble should speak to their bank as soon as possible to get advice on how to deal with their changed financial outlook.

“Before they do, they should, if possible, involve their accountant or financial adviser,” she said.

“Talking to your bank can be much more valuable if you have some financial information or a plan.”

The ability to adapt was critical to the success of any farming business.

Banks are responsible lenders and constantly assess the risk on their books, she said.