19 Jun 2013

Implications seen for rural firms as farmers reduce debt

7:20 am on 19 June 2013

Rural services firms such as PGG Wrightson are expected to benefit from moves by farmers to pay down their debts and spend more in coming years.

A report by Forsyth Barr Research said debt in the farming sector is still rising but the rate of growth is slowing.

The slowdown is being helped by the high New Zealand dollar, stagnant land prices and moves by farmers to pay down their loans following the global financial crisis.

The Farm to Fridge report said debt growth across the agricultural sector surged from 15 billion dollars in 2002 to 47 billion in 2009, driven by the move towards dairy farming in the past decade.

In the last three years it has grown at a slower pace to $50 billion.

Forsyth Barr equity analyst James Bascand said the moves by farmers to pay down their debt will have implications for companies that are exposed to the agricultural sector.