RBNZ’s Orr: New Zealand farms face challenges as interest rates rise

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“The New Zealand farming sector faces challenges as interest rates and other costs rise and returns are forecast much lower, with dairy farms the hardest hit,” Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said on Thursday per Reuters.

RBNZ Governor Orr appeared for a testimony to a parliamentary committee.

The news also spots Senior RBNZ officials noting that debt levels in the sector are down significantly from five years ago when the central bank was highlighting debt as a major vulnerability for the dairy sector.

More comments from Orr

What we observe in the dairy sector in particular, is the structure of the industry – the high leverage nature of the industry – leads to a very high vulnerability to shifts and interest rates up and down.

Cost pressures remain so there’s definitely challenges in the sector.

On the same line RBNZ Deputy Governor Christian Hawkesby told the same parliamentary committee, per Reuters, that the central bank was not concerned about New Zealand’s growing current account deficit.

“New Zealand government debt is still relatively low compared to other countries, and that puts us in a strong position,” Hawkesby said.

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