Interview with ABC SA Country Hour on banks’ support for farmers impacted by drought

Cassandra Hough (Host): Now staying with the drought, and off the back of all this drought concerns and frost events, there are a lot of producers facing financial distress, and as we heard on the program yesterday, they've been asking for banks to be flexible and provide some tailored support for farmers going forward. But what can the lenders do and how aware are they of the plight of South Australia's AG sector? Well, Anna Bligh is the CEO of the Australian Banking Association, and I asked her how banks can respond flexibly to the needs of farmers.

Anna Bligh (Guest): Well, first of all, I'd like to reassure members of the farming community in South Australia that banks are very aware that there are some extreme conditions being faced by some of their customers, and that the drought is really starting to bite very hard for some agribusinesses. Banks have a very practical toolkit that they can provide, and I should say, they're used to doing this all the time around the country, droughts, unfortunately, are not the only difficult weather that can impact farmers. Cyclones hit, floods hit, hailstorms take out crops. Banks deal with these issues on a very, very regular basis and have very experienced teams, and they have very practical ways that they can take some financial pressure off.

Cassandra Hough: There have been some drought roundtables in the past few months where it has been raised that some farmers have been hearing from their banks that formal drought declarations are required before it can trigger assistance. However, formal drought declarations have been phased out for some time now. Is it a concern that that farmers are getting this message from banks?

Anna Bligh: Well, I'd be very concerned if that's the case. As I said, banks are very used to dealing with extreme weather events with their farming customers, literally, on a weekly basis, and you don't need a declaration that there's been a hailstorm. If a customer is experiencing financial hardship for any reason, and there are many reasons, weather is only one of them, but it's one that disproportionately impacts the farming community. But, world prices can drop, there can be trade sanctions, all sorts of things happen, and often at quite short notice. So, you don't need a declaration if you're doing it tough, banks have experienced teams, and they have some really practical things that they can do. They can defer your loan repayments, for example, they can extend some cash flow arrangements, they can consolidate your debt. There's some, as I said, very practical tools that can take the pressure off, because banks also know that droughts end and that it's a matter of how can they get their customers through that difficult patch. Hopefully rain comes and they're back in, producing, selling their product and doing well. So, it's a question of, how do we build a bridge from here to the end of the drought for that customer?

Cassandra Hough: Banks have increasingly centralised their services, though, towards more online systems and closed down regional branches, and that has made it increasingly difficult for grain producers to access that one-on-one support. Is there anything banks can do to reach out and perhaps meet farmers where they are, rather than expecting online or them to travel to major centres?

Anna Bligh: Absolutely, all of our banks who are lending into the agricultural sector have call centres. They have dedicated lines, they have hardship teams that can build one-to-one relationships with each customer. But many banks, not all, but many banks, also in their agri-lending business, have mobile bankers who, literally, as it says, are mobile. They'll drive out to the property and they'll sit down at the kitchen table where the farmer is and work through what the issues are. So, there are a number of ways that banks can have a much more personalised service, they're also doing a lot more virtually, over platforms like zoom and teams, where people might be in very remote places, but they can have a face-to-face conversation with their banker at a time that suits them and their business. And I think all of those channels are really helping improve…

Cassandra Hough: Do you think the closure of branches, though, has contributed to these concerns that have been coming through about a lack of understanding from financial institutions?

Anna Bligh: Well, as I said, in many cases, they've been replaced by mobile lenders, who are actually and I've met a number of the mobile lenders. They're on the road every day, driving out to people's properties, or maybe driving out to a small town where the farmer wants to meet with the banker, with their accountant, for example, it's much more tailored and much more personalised. Now, there are other ways that people are interacting with their banks, but yes, we are going through a very big shift in Australia in how people do their banking, and we need to make sure that we're helping people through that transition. As I said, where they are replacing branches, there are a range of ways that people can have a very personalised service with their banker. But if that's not happening for people, then I want to hear that from them, and can certainly talk them through who the contacts in their bank might be.

Cassandra Hough: Following on from the drought roundtable on the Limestone Coast, there will be more coming up across the state, and given that financial pressure has been something that has been raised at the last one, how will banks be involved with that?

Anna Bligh Well, I'm very pleased that the government has invited the Banking Association to attend the next round table, and I think that is in response to people raising questions about financial pressure. It will give us an opportunity to outline just how banks can help and how they can take the pressure off when people are doing it tough. But it's also an opportunity, an important one, for us to hear straight from the horse's mouth where customers have had any difficulties, then we can work with them to try and resolve who the right contact is and how they can get the service they need. So, opportunity to share information, but importantly, I think a big opportunity for us to listen.

Cassandra Hough: That was Anna Bligh from the Australian Banking Association speaking there.

Ends

Anna Blighbank assistance