Reserve Bank warns of commodity price pressure on farms
Updated at 7:26 pm on 9 May 2012
The Reserve Bank has warned that falling commodity prices for agricultural exports could put pressure on farmers who still have high debt levels, if the decline continues.
In its twice-yearly Financial Stability Report, the central bank says farmers have been using the high prices of the past couple of years to retire debt.
The report notes that agricultural debt relative to earnings has fallen from its peak but remains high compared with the past 20 years.
Reserve Bank Governor Alan Bollard says farm export prices, and where they head next, will determine the impact on the sector.
The report also notes a fall in non-performing loans since the end of last year says banks have eased their lending standards for rural loans.
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