The loans are on top of farmers funding waterway fencing and other projects from farm cashflows and savings.
ASB bank has provided low interest loans for more than 500 farm projects through its Rural Environmental Compliance Loan so farmers can fence, plant trees and put in culverts to keep stock away from streams and do other projects such as meeting their environmental compliance obligations by upgrading or building new effluent ponds.
Farmers have taken out an average loan of $105,000 with the bank.
ASB's Rural general manager Mark Heer said farmers were committing "meaningful" investment to environmental compliance and keeping their businesses sustainable through industry good initiatives and the loan assisted them to drive out change on their farms.
He said the global "megatrend" was for increasing urbanisation particularly in Asia and increasing populations moving from a carbohydrate based diet to a protein based diet and farmers appreciated their businesses had to be sustainable to increase their production and take advantage of opportunities.
"It's great to have these increases, but the rural community has realised they need to get the balance right with increased production and increased sustainability."
The 500-plus environmental projects showed the urban community that farmers were serious about their environmental responsibilities, he said.
"There is a degree of frustration in the rural community that farmers feel they are stewards of the land and for the vast majority the underlying goal is passing on the land to the next generation in a better state than they took it over and (this is not always being recognised)."
Heer said farmers were investing a lot more of their own money on environmental projects and through other lenders.
Since the loan was offered two years ago the bank has found farmers have moved from challenging the change to working with local councils and being part of policy development. The bank only covers its working costs in the loan with its low interest rate of 4.73 per cent compared with a typical floating rate of about 6 per cent.
Heer said the bank introduced the loan after farming customers began talking about the amount of investment they needed to keep pace with environmental regulations and industry good initiatives such as fencing off waterways to improve water quality.
Farmers were upgrading effluent systems, building larger ponds or modifying existing ponds and investing in technology in their focus on protecting fresh water. They were working with local authorities to comply with coming nitrate leaching regulations.
While many of the high profile challenges with effluent management were directed towards dairying, sheep and beef farmers were involved in projects such as fencing off waterways from stock, Heer said.
Source - Stuff