A new study suggests banks should take a different approach when lending to farmers and use personal characteristics to predict suitability.
Banks currently use historic business statistics, and equity levels, to assess loans and credit worthiness.
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However the Lincoln University research found skills, attitudes and knowledge a person has in managing and operating a farm should be considered when assessing whether a loan should be given.
One of the report's authors Dr Peter Nuthall said a farm manager's personal characteristics were likely to be a better predictor of future debt payback performance.
"They have a lifetime of education and experience. A farmer's objectives, and that of their associated household, can be considered part of the human capital which should be considered including attitudes to risky situations and their originating factors," he said.
The researchers used data from a sample of New Zealand farm owner/operators to come up with a model, which they tested with data from a postal survey.
"The results make it clear a manager's personal characteristics are highly correlated with debt payback and, logically, are very likely to be the drivers."
Dr Nuthall said it was also important to note the human characteristics that are related to payback could potentially be modified and improved.
"Counselling and psychotherapy can have very positive impacts and are likely to change a manager's basic characteristics."
"This is a positive approach which might be used when difficulties first surface preventing further problems. However, the manager must be prepared to cooperate in positive action which will then have lasting impacts.
"This is in contrast to short-term fire sale action."
Dr Nuthall said overall, the research had shown, as logically could be expected, that a farm manager's personal characteristics impinge on the debt payback decisions.
"Traditional financial measures reflect history, and the variables explored here reflect the future. In the future, credit scoring models should embrace farmers' personal characteristics."