Farmers expect challenges like bad weather and fluctuating commodity prices, but shouldn’t have to worry about getting a fair deal from their bank.

That’s exactly how they’re feeling though – worried, dissatisfied and under pressure.

We know this from the latest Federated Farmers Banking Survey, conducted in November, which revealed that farmers’ satisfaction with their banks has slipped to an all-time low.

Driving the downward trend is a feeling among farmers that they’re under “undue pressure” from their banks, and that they’re copping unfairly high interest rates.

The six-monthly survey asked farmers about the level of satisfaction and support they’re getting from their banks.

Although 55.6% remained very satisfied or satisfied with their bank relationship, this was down 0.7% from the May survey and a record low since the survey began in 2015.

Of the farmers surveyed, 25.8% felt they’d come under “undue pressure” from their bank over the previous six months, up 2% from May to a new record high.

The results back Federated Farmers’ call for the Government to support an independent inquiry into rural banking.

Farmers need to be confident that their banking systems are operating in a fair and proper way.

Many farmers said their dissatisfaction was because interest rates are too high – much higher than those for residential borrowers.

The average mortgage interest rate in the survey was 8.26%, up from 7.84% last May and a big jump from the lowest point of 3.79% in May 2021.

Meanwhile, the average overdraft interest rate increased from 10.07% in May to 10.52% in November, up from a record low of 6.28% two years earlier.

The banks seem to be charging far higher interest rates for farm lending than for home loans, which is raising eyebrows in farming households across the country.

Many farmers also said their high interest rates are being imposed when banks were reporting record profits.

Farmers deserve to know why farm lending rates are higher, which is why we’re pushing the new Government to back an inquiry.

High rates and other factors have left farmers with an appetite for an inquiry too. That came through loud and clear in the survey responses.

There was concern about the state of competition in rural lending, and some farmers blamed the impact of regulation, such as bank capital requirements and risk weightings.

Some also expressed concern about banks pushing for reductions in farms’ greenhouse gas emissions.

The survey found 44.3% of farmers felt their mental wellbeing had been affected by their debt levels, interest rates, changing conditions or other forms of pressure. This was up 0.7% from May last year.

One positive from the survey was an improvement in perceptions about communication – breaking a run of declines over the past five years – with just under 57% saying their bank communications had been very good or good.

Even so, any feelings about better communication quality are being eclipsed by concerns about high interest rates.

With the industry going tough times, I encourage farmers to ensure they maintain detailed up-to-date budgets.

The survey shows 64.5% of farmers have budgets for the current season, with the percentage rising to 75% for sharemilkers.

But only 18% have budgets so far for next season, and although there’s still a lot of uncertainty about next season, we encourage farmers to plan for it too.

It’s important for farmers to keep in touch with their bank, rural professionals, farm discussion groups and other experienced farmers to work through any issues before they become serious.

There’s also a great opportunity for farmers to talk to their bank managers about how the bank sees their business and what they can do to improve their margin over base and, therefore, interest rate.

This could be as simple as more regular budget updates or a copy of the farm environmental plan.

And remember that, if things get bad, your Rural Support Trust is there to help and there is farm debt mediation too. We recently ran a webinar on how farm debt mediation works and what to look out for.