(25 June 2012 – New Zealand) Demand for loans in the agriculture sector is increasing according to the Bank of New Zealand (BNZ).Chief executive Andrew Thorburn said BNZ had increased its exposure in agriculture. Its market share was now 21.85 percent; about 18 months ago it was 19.5 percent.
In Canterbury alone, the banks agri-lending book had grown 52 percent since January 2011.
One farmer client is proceeding with a NZ$100 million (A$93 million) dairy farm and irrigation conversion in Central Otago.
BNZ had provided some backing to the NZ$82 million Rangitata South Irrigation Scheme. The scheme, which involves Timaru businessman Gary Rooney, is due to be finished next year to provide water to up to 16,000 hectares.
This was just one of many water infrastructure or irrigation-based plans to improve productivity, some of which BNZ was backing through its Christchurch agri-team, which had a detailed knowledge of the dairy sector, Thorburn said.
Despite the earthquakes, which the Canterbury Earthquake Recovery Authority says caused a 5 per cent fall in gross domestic product in the Canterbury region, the health of the regional economy had proved resilient, Thorburn said.
‘The condition of our lending book has been pretty stable. Where we thought it would deteriorate quite significantly, it hasn’t … If you look at arrears rates at 90 days, which is where we know it’s getting bad, Christchurch is only marginally above the rest of the country.’
BNZ said mid-to-large sized farms with annual revenues of about NZ$20 million generally had strong balance sheets and good credit lines.