Forecasts for improving prices for dairy keep being extended.
In spite of that the message from banks, accountants and other advisers has been keep calm, keep a tight rein on your costs and carry on.
This interview with Kerry Adams a chartered accountant says, at least in Southland, something has changed.
He says one of the banks is forcing people off their farms.
The bad news starts at 1:29.
“The reality for most farmers is they get out of bed, they’re losing money . . .
Down south we’ve got a bank that’s actually taking a lot of action against farmers and telling them they’ve got to sell out at the end of the season because they’re pulling the funding. . . We know at least 35 farms that have been told . . .
I don’t think it’s a smart move on their part, it just makes it worse than what it is. . . “
He is clear it is just one bank and just in Southland.
But forcing people off farms when the milk price is so low is bad for the farmers and sharemilkers and their staff, bad for the bank and ultimately bad for the whole industry.
Fire sales like the video describes result in lower stock and land prices which costs the bank and reduces everyone else’s equity.
However, we don’t know the bank’s side of the story and even when the milk price was high there were mortgagee sales.
The message from our bank is that they have budgeted to carry people through a couple of bad seasons and when prices improve, as they eventually will, they will start addressing structural problems.