March 16, 2025 • 6 mins
Federated Farmers' banking spokesman is calling for the Reserve Bank to drop overly conservative and growth-restricting banking capital rules that are costing farmers a fortune. Plus, we ask how autumn calving is going during a Manawatū drought.
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Episode Transcript
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Speaker 1 (00:00):
But let's kick it off with Richard McIntyre, Federated Farmers
Banking spokesperson who's calling for the Reserve Bank to drop
overly conservative and growth restricting capital rules that are costing
farmers of fortune. That's an understatement of the year, Richard McIntyre.
They're being ripped off.
Speaker 2 (00:21):
Look were city are at the moment, Jamie. You know
we're being calling for this for there's quite some time.
In fact, it was one of the main reasons that
we actually called for the banking acquired to assist not
just what the banks were doing, but what the Reserve
Bank was doing, which was making life hart of the fire.
Speaker 1 (00:35):
Actually, I should apologize to the banks because they've got
to play by the rules that are set by the
Reserve Bank. So in twenty nineteen under Adrian Or the
banks moved from their old requirement was to hold enough
capital for a one on one hundred year financial event.
In twenty nineteen, goodness knows why we decided that for
farmers or farming loans you had to hold enough capital
(00:59):
to stand a one and two hundred year financial event.
And basically that's added fifty two one hundred basis points
to agricultural loans across the board about one percent.
Speaker 2 (01:11):
Yeah, that's great. So that's a huge amount, and we
think that Adrian Oil was just way, way, way too conservative.
You know, the equivalent here would be that if you ensured,
you know, absolutely everything you own, add zero excess. You know,
no one does that because it's just far too costly
for the benefit. But that's what Adrian Oi had chosen
to do. And it was just effectively money that was
going straight out of the egg sector. We reckon about
(01:33):
six hundred million a year straight out of the egg
sector and effectively overseas to where the banks get their
money from. And you think about what that money could
be used for, you know, by farming businesses, you know,
either paying down debt, spending it on infrastructure, et cetera
within rural communities, or you know, anything like that.
Speaker 1 (01:51):
Paying tax on increased profits would be one thing, and
that would help the economy. You're suggesting at farm level,
it's an eye watering forty four thousand dollars of extra
interest payments for your average farmer that comes straight off
their bottom line.
Speaker 2 (02:06):
Yeah, that's correct. So based on our last federal and
Farmer's banking So members were telling us that that's there. Yeah,
they're based on the average debt that would this will
save forty four thousand dollars for every every farming business
on average.
Speaker 1 (02:20):
Though, and once again I don't want to sound like
a patsy for the banks here, but surely farm loans
more risky than house loans. Well, they're certainly less liquid.
Put it that way.
Speaker 2 (02:34):
Yeah, Look, that's what we keep getting told. But you know,
from everything I've seen, I'm not convinced that farm wands
present a significantly greater risk than in the other form
of wedding. You know, it was certainly not enough to
be charged with the risk premiums that we are. You know,
if you think of what's happened over the last of
the ten or fifteen years, we've had quite as multu
cycle with you know, recessions, droughts, marketplace of oovers, COVID,
(02:56):
high interest rates, low commodity prices, all that stuff, And
it really begs the question, you know, if agdates that
much risk here, so then how much has the how
much of the bank's actually lost on rual loans during
that period. And what was fascinating, you know, during the
banks presenting to the sort of community for the banking
inquiry is it turns out that the banks have averaged
(03:16):
less than one farm per year going into receivership. So
where where's the risk from agdate to the banks or
to the financial system to justify you know, this risk
premium that's being charged. And it sort of goes back
to what you know, to what Cameron Bakery says. You know,
banks are pricing for risk that they're not taking.
Speaker 1 (03:36):
Have we had had a bit of a break in
the traffic, a lucky turn with Adrianaw's exit or soon
to be exit.
Speaker 2 (03:44):
Yes, I certainly would say this is very fortuitous for farmers,
and I'd argue that the economy in general, to be fair,
you know, hopefully we can get a new Reserve Bank
governor that is a little bit more focused on economic
prosperity and a little less conservative. You know, obviously we
still want to have a resilient footential system. But look
at one and two hundred ye of financial event is
(04:05):
just too high a drag on the economy and their
most productive sector.
Speaker 1 (04:09):
Absolutely well, good luck with that one. Good luck petitioning
the new governor of the Reserve Bank, whoever he or
she might end up being Richard McIntyre when you're not
doing that for Federated Farmers, you're the dairy spokesperson. That's
because you're a cow cocky. You're autumn carving. You are
a sucker for punishment. That means milking basically all year round,
(04:30):
doesn't it.
Speaker 2 (04:32):
Yeah, it does, it does. But like the awkward is
like having milk in their coffee. So and they're prepared
to pay me a bit more for it, so I
do it. I suppose.
Speaker 1 (04:39):
How are you getting on autumn carving and a drought.
Speaker 2 (04:43):
Yeah, this is always the risk with the autumn carving,
you know, when it doesn't rain and you don't have
any protein to feed your cares. Basically it's a little
bit of a challenge. To be fair. We are feeding
out a huge amount of supplement at the moment, a
lot of high quality protein meals and the hucks just
to sort of keep these guys going because it's the
start of their actation and if you get it wrong
(05:04):
now it's all appeal from there. So yeah, a bit
of work going in with with myself and the staffter
to keep their going. But look at it, rain soon,
we'll get some grass and we'll be away from there.
Speaker 1 (05:14):
And daughter's eighteenth birthday today, you want to give her
a shout out.
Speaker 2 (05:18):
Look, I'd love to look my daughter Elia eighteenth today,
your happy birthday. Look, she's Jamie. She's growing into such
a great young lady and she's going to be such
an awesome adult. So just wish all the best for
today and into the future.
Speaker 1 (05:33):
You sound like a really proud dad, Richard McIntire. Good
on you very much. So yeah, and girls call guse girls.
I'm only speaking from personal experience here in our family.
They cause a lot less grief than the boys.
Speaker 2 (05:47):
They certainly can do, but yeah, they can cause it
of grief of their own though.
Speaker 1 (05:51):
All right, Richard McIntyre, thank you very much for your time.
You guys at Federated Farmers, keep up the good work
and keep holding you know, the feet of the Reserve
Bank to the flame on this one, because I reckon
if farmers played paid one percent less across the board,
that would really benefit the economy, especially in a year
like this where farmers will be paying meaningful tax.
Speaker 2 (06:12):
Aw Look, this is so important to the exept, Jamie.
We've just got to get this over. The one
But let's kick it off with Richard McIntyre, Federated Farmers
Banking spokesperson who's calling for the Reserve Bank to drop
overly conservative and growth restricting capital rules that are costing
farmers of fortune. That's an understatement of the year, Richard McIntyre.
They're being ripped off.
Speaker 2 (00:21):
Look were city are at the moment, Jamie. You know
we're being calling for this for there's quite some time.
In fact, it was one of the main reasons that
we actually called for the banking acquired to assist not
just what the banks were doing, but what the Reserve
Bank was doing, which was making life hart of the fire.
Speaker 1 (00:35):
Actually, I should apologize to the banks because they've got
to play by the rules that are set by the
Reserve Bank. So in twenty nineteen under Adrian Or the
banks moved from their old requirement was to hold enough
capital for a one on one hundred year financial event.
In twenty nineteen, goodness knows why we decided that for
farmers or farming loans you had to hold enough capital
(00:59):
to stand a one and two hundred year financial event.
And basically that's added fifty two one hundred basis points
to agricultural loans across the board about one percent.
Speaker 2 (01:11):
Yeah, that's great. So that's a huge amount, and we
think that Adrian Oil was just way, way, way too conservative.
You know, the equivalent here would be that if you ensured,
you know, absolutely everything you own, add zero excess. You know,
no one does that because it's just far too costly
for the benefit. But that's what Adrian Oi had chosen
to do. And it was just effectively money that was
going straight out of the egg sector. We reckon about
(01:33):
six hundred million a year straight out of the egg
sector and effectively overseas to where the banks get their
money from. And you think about what that money could
be used for, you know, by farming businesses, you know,
either paying down debt, spending it on infrastructure, et cetera
within rural communities, or you know, anything like that.
Speaker 1 (01:51):
Paying tax on increased profits would be one thing, and
that would help the economy. You're suggesting at farm level,
it's an eye watering forty four thousand dollars of extra
interest payments for your average farmer that comes straight off
their bottom line.
Speaker 2 (02:06):
Yeah, that's correct. So based on our last federal and
Farmer's banking So members were telling us that that's there. Yeah,
they're based on the average debt that would this will
save forty four thousand dollars for every every farming business
on average.
Speaker 1 (02:20):
Though, and once again I don't want to sound like
a patsy for the banks here, but surely farm loans
more risky than house loans. Well, they're certainly less liquid.
Put it that way.
Speaker 2 (02:34):
Yeah, Look, that's what we keep getting told. But you know,
from everything I've seen, I'm not convinced that farm wands
present a significantly greater risk than in the other form
of wedding. You know, it was certainly not enough to
be charged with the risk premiums that we are. You know,
if you think of what's happened over the last of
the ten or fifteen years, we've had quite as multu
cycle with you know, recessions, droughts, marketplace of oovers, COVID,
(02:56):
high interest rates, low commodity prices, all that stuff, And
it really begs the question, you know, if agdates that
much risk here, so then how much has the how
much of the bank's actually lost on rual loans during
that period. And what was fascinating, you know, during the
banks presenting to the sort of community for the banking
inquiry is it turns out that the banks have averaged
(03:16):
less than one farm per year going into receivership. So
where where's the risk from agdate to the banks or
to the financial system to justify you know, this risk
premium that's being charged. And it sort of goes back
to what you know, to what Cameron Bakery says. You know,
banks are pricing for risk that they're not taking.
Speaker 1 (03:36):
Have we had had a bit of a break in
the traffic, a lucky turn with Adrianaw's exit or soon
to be exit.
Speaker 2 (03:44):
Yes, I certainly would say this is very fortuitous for farmers,
and I'd argue that the economy in general, to be fair,
you know, hopefully we can get a new Reserve Bank
governor that is a little bit more focused on economic
prosperity and a little less conservative. You know, obviously we
still want to have a resilient footential system. But look
at one and two hundred ye of financial event is
(04:05):
just too high a drag on the economy and their
most productive sector.
Speaker 1 (04:09):
Absolutely well, good luck with that one. Good luck petitioning
the new governor of the Reserve Bank, whoever he or
she might end up being Richard McIntyre when you're not
doing that for Federated Farmers, you're the dairy spokesperson. That's
because you're a cow cocky. You're autumn carving. You are
a sucker for punishment. That means milking basically all year round,
(04:30):
doesn't it.
Speaker 2 (04:32):
Yeah, it does, it does. But like the awkward is
like having milk in their coffee. So and they're prepared
to pay me a bit more for it, so I
do it. I suppose.
Speaker 1 (04:39):
How are you getting on autumn carving and a drought.
Speaker 2 (04:43):
Yeah, this is always the risk with the autumn carving,
you know, when it doesn't rain and you don't have
any protein to feed your cares. Basically it's a little
bit of a challenge. To be fair. We are feeding
out a huge amount of supplement at the moment, a
lot of high quality protein meals and the hucks just
to sort of keep these guys going because it's the
start of their actation and if you get it wrong
(05:04):
now it's all appeal from there. So yeah, a bit
of work going in with with myself and the staffter
to keep their going. But look at it, rain soon,
we'll get some grass and we'll be away from there.
Speaker 1 (05:14):
And daughter's eighteenth birthday today, you want to give her
a shout out.
Speaker 2 (05:18):
Look, I'd love to look my daughter Elia eighteenth today,
your happy birthday. Look, she's Jamie. She's growing into such
a great young lady and she's going to be such
an awesome adult. So just wish all the best for
today and into the future.
Speaker 1 (05:33):
You sound like a really proud dad, Richard McIntire. Good
on you very much. So yeah, and girls call guse girls.
I'm only speaking from personal experience here in our family.
They cause a lot less grief than the boys.
Speaker 2 (05:47):
They certainly can do, but yeah, they can cause it
of grief of their own though.
Speaker 1 (05:51):
All right, Richard McIntyre, thank you very much for your time.
You guys at Federated Farmers, keep up the good work
and keep holding you know, the feet of the Reserve
Bank to the flame on this one, because I reckon
if farmers played paid one percent less across the board,
that would really benefit the economy, especially in a year
like this where farmers will be paying meaningful tax.
Speaker 2 (06:12):
Aw Look, this is so important to the exept, Jamie.
We've just got to get this over. The one
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