The Reserve Bank of New Zealand has highlighted a worsening of the indebtedness of some of New Zealand's biggest dairy farms, pointing out more than a third of the debt is held by dairy farms that are unprofitable at current dairy milk payout levels.Dairy debt rose from NZ$11 billion to NZ$24 billion between 2003 and 2008, as a rise in expected milk payouts and a surge in farm values encouraged double-digit lending growth by New Zealand's Big Four Australian-owned banks.The Reserve Bank said almost half of this debt was held by the most indebted 10 per cent of farmers, many of whom had invested heavily in buying out neighbours and converting their sheep and beef farms into dairy farms.The analysis showed a marked increase in the loan-to-valuation ratios of farms because of a 20 per cent fall in dairy farm prices between the 2007/08 season and the 2010/11 season. "The proportion of debt in high LVR buckets has increased significantly, which is likely to make banks less comfortable forbearing on troubled operations," the Reserve Bank said.