Rabobank Support Farmers During East Coast Drought

Rabobank support for farmers during East Coast drought

Agribusiness banking specialist Rabobank has moved to reassure clients affected by significant drought conditions on New Zealand's East Coast that it will work to support them through the current difficulties.

Rainfall has been significantly below average for the North Island's East Coast since spring 2006 and, while the region has received some welcome rain in the past week, feed supplies in the area remain severely constrained.

Rabobank general manager Rural New Zealand Ben Russell said the bank's primary focus was to work alongside affected clients to mitigate the impact of the drought and to ensure farmers were well positioned to rebuild their production and financial position when seasonal conditions improved.

"The financial consequences of this drought will be significant particularly for sheep producers, when combined with low lamb schedule prices and increasing interest rates," he said.

"Many sheep producers are not trading profitably at present due to the low lamb schedule prices. The drought will exacerbate this situation by reducing lambing percentages and production, and by increasing costs where farmers need to buy additional supplementary feed."

Dairy, beef and deer producers would also be affected by the drought due to the impact on pasture availability and quality, and higher production costs.

"Fortunately, the vast majority of our clients are in a sound financial position, with strong equity and good long-term viability, and we are confident in their capacity to work through a difficult season like this one, and bounce back strongly when rain and pasture growth return," Mr Russell said.

"Further, Rabobank is confident that the long-term outlook for pastoral agricultural products –
including beef, lamb, deer and dairy – is sound, despite the current price pressure being felt particularly by lamb producers."

Mr Russell said Rabobank's rural loans were specifically designed for farmers and offered financial flexibility. Loan products, such as the interest-only Rabobank All in One facility, are designed to maximise cash flow availability during adverse circumstances such as drought.

The Rabobank group is experienced in working with farmers through drought conditions, having worked closely with Australian clients during the 2002-2007 drought, the worst in Australia's history. Rabobank has been rated the best agribusiness bank in Australia for two year's running by Merrill Lynch.

Rabobank regional manager East Coast Todd Charteris encouraged New Zealand farmers affected by drought to work with their bank, accountant and farm adviser to develop revised budgets and a plan that suited their individual business circumstances.

"It is important for farmers to talk through their current problems with their bank and other advisers, as well as family members and other farmers facing the same challenges," he said.

"Any farmers who are expecting to run short of working capital during the course of the year are advised to contact their bank as soon as possible.

"Rabobank is very supportive of the recent Woolshed meetings organised by Federated Farmers and Meat and Wool New Zealand. They are an ideal venue to talk to other farmers and professionals on the different strategies available to manage through the drought. We will continue to participate in these and other similar forums."

Mr Charteris said Rabobank was actively contacting clients to discuss their situation and options for dealing with the drought, but encouraged any clients who were concerned about their position to contact the bank immediately.

About Rabobank

Rabobank New Zealand is a part of the international Rabobank Group, the world's leading specialist in food and agribusiness banking. Rabobank has more than 100 years' experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness.

Rabobank has a AAA credit rating and is rated one of the world's safest bank by Global Finance magazine. Rabobank operates in 43 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1500 offices and branches.

Rabobank is one of New Zealand's leading rural lenders and a significant provider of business and corporate banking and financial services to the country's food and agribusiness sector. The bank has 29 branches throughout New Zealand.

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