‘Fair-weather’ lenders

2009-07-01
Southland farm adviser Ivan Lines said ironically he had recently been asked to speak to a group of sheep farmers warning about the pitfalls of the good times.

"One thing I did warn them about were fair-weather lenders," he said.

Fonterra's advance of $2.90/kg MS was creating significant stress on projected cashflows and overdraft limits were being pushed to the limits throughout the season. Based on advance rates farmers will only have received $3.60/kg by the end of June next year.

There were a lot of decisions to be made on-farm and a lot of budgets and cashflows being reworked. But if farmers could refine their systems and get through the downturn, it would ultimately bring about stronger, more profitable businesses when returns lifted.