Farmers Want Less Spending While They Borrow More

Farmers think the answer to the “high” exchange rate is less government spending.

Speaking as one exporter to other exporters and to those whose livelihoods depend on exports, there is much more than monetary policy and the Reserve Bank Act involved here.

We know from experience we cannot take on the world and pumping out $5 notes, just like the United States or the Bank of England, is a race to the bottom. If you excuse an uncharacteristic bluntness, people are dreaming if they believe our Reserve Bank can set and defend an exchange rate against all comers.

While that is not hard to agree with, farmers owe $40+ billion in debt to banks for land and part of the reason New Zealand is not where it should be in the world is that this money has been loaned from foreign banks to low ROI, low tax, historically low profit and employment business in farming.

As a country – and farmers are included in this message – we need to stop living well beyond our income. The main target for this message has to be government, centrally and locally.

He may want to start with his own farmers.  While some say they are the “backbone” of the country, the backbone has been hunchbacked from years of their own obesity from debt.


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  • Adolf Fiinkensein

    Whale, I’m sorry to say but this is another example of piss poor reporting on your part.

    $40 billion of debt is meaningless unless you run alongside it the total value of rural land.

  • Will

    Farmers are often accused of running up debt by over-bidding on inflated land prices, and while there is some truth to this, it ignores the vast amounts spent on capital development as the rural sector diversified away from struggling dry-stock to the dairy industry powerhouse we rely on today. For that matter, the remaining sheep/beef farms have seen considerable worthwhile investment too. My point is that much of the rural debt is productive, certainly compared to state debt which creates little more than demand for our currency.

    • Mr_Blobby

      Yes Income producing debt is good debt. A strong currency is a good currency. Remember when the NZD was at 40 cents USD. The Government had to call up what few friends we had left and beg them to buy NZD, or we would not be able to pay our loans to them.

      Yes if the exchange rate drops those cheap offshore loans will become very expensive.

  • Mr_Blobby

    I’m not an economist, thank god for that.

    But historically the strongest economies in the World have had the strongest currencies. Monetizing debt (quantitative easing, increasing money supply, buying mortgage backed securities, call it what you will) IE printing money to pay our debts, all sounds really good. Except it debases your own currency, how is this a good thing. To me it seems like a last desperate throw of the dice when all else fails.

    This is what happens when you have failed teachers running the country.

    • grumpy

      Really, the high dollar is the best thing to happen for farmers.
      Unless they only want to be able to sell their product because it is cheap, they should use the opportunity to seek out high value and value added markets but I think they are too stupid for that.
      A low exchange rate only gives the illusion of higher income. Only when that income is measured locally. A high dollar gives the opportunity to increase REAL income and is the only way to raise NZ’s living standards.

    • farmboy

      what is this beat up on farmers day ya whankers how much do u fuckn townies owe to the banks least we have bought a producing asset while the majority of people from town buy a house then sell it to retire how much to new zealand do u contribute in taxs whaleoil and dont forget who kept your beloved national relavant when u townies left them in the early 2000s

      • grumpy

        I agree. Aucklanders like Whale are a net consumer of wealth whereas farmers, for all their shortcomings are nett producers.

    • blazer

      what failed teachers are running the U.S fool?Wall St runs monetary policy…in case you hadn’t noticed the U.S$ is the default currency for international trade.

      • Mr_Blobby

        I was talking about NZ you fool. With the US, default reserve currency it may be. But they are busy monetizing there debt, that is printing (virtual) money to pay the interest on what they owe the rest of the World and still borrowing more to fund ongoing deficits.

        Mark my words this will not end well for anybody.

        • blazer

          so who are the failed teachers again 24 k fool?

  • SaggyNaggy

    You are way off the reservation now. Your response to a perfectly good article is to start slagging off farmers for their private debt to private banks?!

    Why don’t you just join Labour and be done with it?

  • cows4me

    So farmers have 40 billion in debt, oh dear, they need a good arse kicking, put the boot in WO. And pray tell how many billions were spent on welfare last year. I’ll bet the farm our return on that debt was many fucking times that to the billions spent on welfare. I rest my case.

  • blazer

    Farmers are legendary whingers…too much rain,not enough rain,imports too dear(oil,machinery),dollar too high,etc,etc…most are property speculators looking for cap gain.They are efficient(large scale)but ROE is tiny.

    • Anonymouse Coward

      My Father told me that he had listened to farmers cry poverty all his life, and yet he never seen a farmer pedaling into town on a push bike.

  • Bruno 32

    Farming is so capital intensive these days . New technology to look after the environment doesn’t come cheap .It is private debt ,The interest is being paid,so whats the friggin problem ?

    • Travis Poulson

      They made a public statement. They must be attacked. How dare they borrow money from private banks and pay interest.

  • Bruno 32

    I find it very obtuse that Labour and the green party are backing a dodgy ,overweight ,German with a criminal past as their savior. On the other hand they denigrate, despise,hate,and actively promulgate the destruction of farming businesses that apart from the maori gifting and a few silver spoons ,have been built up by a bunch of honest ,hard working kiwis. Russel Norman is an arsehole.

  • viking

    Fonterra is a 20 billion company according to todays press. Fonterra supplies NZ with 25% of our income in foreign exchange.Probably due some respect I’d suggest.