File image. Photo: RNZ / Cosmo Kentish-Barnes
Lobby group Federated Farmers is calling on the next government to carry out an independent inquiry into rural banking.
It comes after a survey the group conducted in May found more farmers were coming under undue pressure from their bank.
Numbers were up from 17 percent in November 2022 to 24 percent in May 2023 - the highest level since the surveys began in 2015.
Spokesperson Richard McIntyre said farmers were doing it tough with rising costs, bad weather and falling payouts.
"The last thing they want to be worrying about is whether they're getting a fair deal from their bank."
The survey also showed farm interest rates had risen sharply - with farmers servicing an average interest rate of 7.84 per cent in May, up from 4 percent in May last year.
The average overdraft interest rate in May was 10.07 percent.
McIntyre said those numbers would have only risen since May - and farmers were feeling the pinch.
"Kiwi farmers are currently carrying around $63 billion of debt, so a 4 percent increase in interest rates means there will be 2.5 billion fewer dollars circulating in our rural economy.
"Farmers are also noticing that banks charge much higher interest rates for farm lending than home loans, but there seems to be no clear explanation why that's the case."
Federated Farmers wanted to know if higher interest rates for farmers were increasing banks' profitability or cross-subsidising a much more competitive market for home loans, McIntyre said.
"We also want to understand what role regulation plays in the higher interest rates farmers are paying."
The Commerce Commission is currently undertaking a market study into personal banking services - but it does not cover rural lending.
McIntyre said farmers and rural communities deserved to have the same assurances that their banking systems were operating in a fair and proper way.
"So Federated Farmers are calling for the government to support an independent inquiry into rural banking."