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New Zealand Reserve Bank:

‘Surge in horticulture loans needs attention’

Bank loans intended for horticulture financing, led by the kiwifruit industry, is growing by 15 per cent a year and will need watching for associated emerging risks. This was stated in the latest Financial Stability Report from the Reserve Bank. The risk was in light of potential labour constraints in the near term due to border restrictions, the six monthly report on the New Zealand economy said.

The report also noted that uncertainty about global economic conditions is adding to limited demand for dairying lending, particularly for farm expansion. The report said the agriculture sector continued to show relatively less strain from Covid-19 impacts than other business sectors. Food production was considered essential in the higher alert levels, allowing food processors to continue operating during the restrictions.

The sector's resilience had also been boosted by a comparatively rapid recovery in the economy of China, New Zealand's biggest trading partner. The report also stated that the banks' appetite for overall agricultural lending had held steady, with a shift continuing towards more diversification in their portfolios to limit exposure.


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