A Northland farming organisation says banks are quietly forcing debt-ridden dairy farmers to quit by refusing to refinance their loans.
The plunge in dairy prices at this week's auction caught farmers and the government by surprise and helped push down the New Zealand dollar.
Farmers of New Zealand says successive drops in international prices have spooked the lenders and they are pulling the plug on their most indebted clients.
The Whangarei-based group says some farmers are being given just 30 days to refinance, or face mortgagee sales and stock seizures.
Farmers of New Zealand operations director Bill Guest said banks were looking at the reduced payouts to farmers and telling their the most heavily-indebted clients to find a new lender.
Mr Guest said the bankers were not waiting for people to default on their loans and were moving swiftly.
"What they simply do is they say, 'we're not going to roll over your mortgage', and we've got a number of cases where the banks have said 'okay you've got 30 days'.
"If you don't refinance in that 30 days, they then issue the Property Law Act notice that's tied to the land."
Auckland lawyer John Waugh works on farm debt cases and agrees the banks are moving speedily.
He said the new payout forecasts were below worst-case scenarios that banks had worked out for some farmers, and the banks are encouraging those farmers to exit before they default.
Mr Waugh said they are are worried about a potential public backlash, and he knows of one bank that has forced farmers off their land, and made them sign confidentiality agreements to avoid publicity.
John Waugh says there are questions to be asked about whether the banks are complying with their voluntary code of practice, under which banks agree to provide credit, or increase it, only when their information shows the customer would be able to repay the lending.
He said the Supreme Court of Victoria had just ruled that the code is a contract, and must sit alongside loan agreements.
Economic Development Minister Steven Joyce said most farmers had been through this before and were very resilient.
"The dairy cycle is a commodity cycle and it does come round and go round," he told Morning Report.
Farmers at last month's Fieldays told him they would have to respond in terms of tightening up expenditure, but that they had seen it all before.
"The dairy farmers will be feeling this a lot at the moment, and I feel for them but actually they are also very resilient and they're very good at coping with the challenges of the world commodity cycle."
Mr Joyce said reports that banks were refusing to refinance farmers' loans should be treated carefully.
"The banks will not be wanting to disrupt the whole fabric of the dairy farming community because it's their funding they've got invested."
He encouraged farmers to seek advice such as through DairyNZ and the Rural Support Trust and not try to battle on alone.