As global milk prices continue their steady decline, the financial challenges of dairy farmers are now spreading to their bankers, particularly in New Zealand.
New Zealand is of particular concern because many farmers in the country are still carrying significant amounts of debt that they used to transition traditional farms to dairy farms, according to “Banks Feel the Pain of Dairy Downturn” in the Wall Street Journal (subscription required).
“New Zealand’s central bank estimates that dairy loans represent around 10% of total bank lending in the country,” the story says. “In December, it warned that 80% of farmers are likely to have negative cash flow in the 2015-16 season because of low dairy prices.”
