New Zealand's Reserve Bank warns of escalating debts among dairy farmers

New Zealand’s central bank has warned that banks are facing a growing risk of bad debt among the country’s struggling dairy sector.

The Reserve Bank of New Zealand said in its six-monthly financial stability report that weak dairy prices are putting a lot of pressure on loans made to dairy farmers.

RBNZ warns that the danger of a substantial rise in bad loans in the dairy sector has increased over the past two years due to high debt levels and falling milk prices.