Flood protection, drought resilience and emissions management are the three main targets farmers have identified to use Westpac’s Sustainable Farm Loan in its first year.
Head of agribusiness Tim Henshaw told the Farmers Weekly In Focus podcast that more than $2.7 billion in lending had been provided in the first year of the initiative.
Farmers accessing the loan receive a 0.2% discount on all existing farm lending and have two years to meet the Westpac Sustainable Farm Standard, which complements farm assurance programmes that many farmers are already using on farm.
Henshaw said given the extreme weather farmers experienced in the past year it was not surprising they are looking to ensure the resilience of their businesses.
“You’re seeing more people looking at how water is flowing over their properties,” he said.
“I think we’ve taken some pretty big lessons out of Cyclone Gabrielle and based on that they may be tweaking where they rebuild fences, it might be changing the location of silage pits, seeing people strengthening banks along streams and rivers.
“Culverts are being rebuilt bigger and stronger as well to withstand higher water flows that we’re seeing.”
Generators and communications systems are also a priority to ensure the farm can continue to function after a flood event.
“In the drought space you’re seeing planting of drought-resistant crops – the tall fescues, coxfoots, things with deep root structures, and they’re also planting on farm to produce shade for more animals.”
Farmers are also investing in soil moisture monitoring, making sure that irrigation is as precise as can be, and investing in water storage.
“So it’s pretty important, as we’re seeing longer, drier periods with the same amount of rain, we need to be able to capture some of that water to use for irrigation.”
Converting machinery to electric power and installing solar energy systems is also a focus for some, Henshaw said.
While the push for more sustainable farm systems has been met with some pushback, particularly around the cost, Henshaw said the market signals are loud and clear.
“I think the direction of travel from all stakeholders – customers, the supply chain, investors, the regulators – are all pretty clear.
“So it’s within that context that Westpac’s position is asking ‘How can we help?’”
Many large global investors are evolving to include sustainability mandates, which is something to keep an eye on, he said.
“I think there is a growing pool of investors and money globally that does need to have a sustainability aspect to it.
“So hedge funds and pension funds will have mandates that they need to invest in sustainable assets.
“So one of the things I like about the sustainable farm loan is in the future that could essentially be bundled up and you could go to those investors and provide them with a bond opportunity to invest in sustainable agriculture in New Zealand.
“We don’t want the great work we’re doing in New Zealand to miss out on capital by not having that assurance behind the sustainability of New Zealand’s produce.”
