Light at end of Tunnel - National Bank

Media release
For immediate release
2 May 2008
Light at the end of the tunnel for farmers, says National Bank
Farmers affected by drought may take up two years to recover financially, says Charlie Graham, General
Manager of Rural Banking, National Bank.
But they are a resilient group who are very good at adapting to changing conditions, planning and putting in
place strategies to protect their business, he says.
“Farmers’ resourcefulness can never be underestimated. We take a long term view of farmers’ viability and
we are confident in their capability to work through a difficult season like this one, and recover strongly now
the rain has arrived,” said Mr Graham.
The financial consequences of this drought will be significant particularly for sheep farmers. “However
farmers are in a much better financial position to handle this drought than previous droughts because of their
strong equity positions,” says Charlie Graham. “REINZ figures show the median farm sale price is up 41%
from a year ago.”
The National Bank has a positive outlook for the rural economy – international demand for food is set to
outstrip supply, and while input costs have increased there have been strong price increases for a broad
range of commodities. “Prices for meat protein are finally improving.”
Charlie Graham says that the psychological impact of drought is an important factor to bear in mind. “For
affected farming families, the Rural Support Trusts provide valuable support. Many of us find it difficult to ask
for help, but that’s what the Trusts are there for.”
“Often the most debilitating aspect in these situations is that personal goals are not being met. It becomes
hard to focus on the next the season and look ahead. But past experience tells us this is what we need to
do – focus on the light at the end of the tunnel.”
Charlie Graham suggests farmers assess their current positions, put a recovery plan in place, and then
continually monitor and review the plan. “A farm budget and cashflow should be prepared for the next one to
two years to understand the financial impact the drought has had. The process will help crystallise a sound
plan. It may be necessary to re-evaluate livestock policies and farm management systems. From there you
will know what financial accommodation you may need.”
Corporate Affairs
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Fax: (+64 9) 3744 250
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Financial actions that can be taken include re-financing seasonal debt to core term debt, and changing to
interest only loans. It may involve additional borrowing to finance capital expenditure that reduces the
exposure of the business to droughts in the future.
“We encourage people to talk to their bank as soon as possible and tell them how you see your position.
Examine all options and seek advice from those you respect and trust.”
The National Bank is New Zealand’s largest rural lender, and with a 400-strong team, well equipped to assist
farmers work through the financial implications of the drought.
“Our primary focus is to work with affected clients to help them understand and assess their financial
position, and support them through the current difficulties,” said Mr Graham.
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For more information contact:
Jess Malcolm
External Communications Manager
The National Bank
09 374 4235
0272 752 834