Farm Debt Mediation
The Small Business Commissioner is responsible for administering the Farm Debt Mediation Scheme (the Scheme) under the Farm Debt Mediation Act 2018. The Act came into operation on 3 September 2018. Similar laws have been in place in New South Wales, Victoria and Queensland since 1994, 2011 and 2016 respectively.
The Scheme makes it compulsory for banks and other creditors to offer mediation to South Australian farmers before commencing debt recovery proceedings on farm mortgages.
Farm debt mediation is a structured negotiation process where a neutral and independent mediator assists the farmer and the creditor to try to reach agreement about current and future debt arrangements. The mediator's role is to facilitate the discussion and they will not provide advice on the matters in dispute. Mediation is a simple, voluntary and confidential process that is quick, accessible and affordable.
Mediations will be provided through the Office of the Small Business Commissioner. Further information about mediations with the Office can be found here.
This Scheme applies only to:
- farm mortgages covering a farm (or part of a farm), farm machinery or water or irrigation rights; and
- farmers defined as: 'a person (whether an individual person or a corporation) who is solely or principally engaged in a farming operation'. This includes people who own land cultivated under a share-farming agreement, or the personal representatives of a deceased farmer.
Guarantors to a farm mortgage need to be fully informed and involved in the process.
A farmer has 21 days to respond to an offer to mediate, otherwise the creditor can commence action as normal.
It is recommended that farmers seek assistance from their Solicitor, Accountant or some other appropriately qualified person. They can assist farmers to prepare for mediation, attend the mediation session with farmers and help with any actions that need to be undertaken after the mediation session.
Rural Business Support is also available to assist on Freecall 1800 836 211. Rural Business Support provides the Rural Financial Counselling Service in South Australia and provides primary producers and small rural businesses that are experiencing hardship with free and impartial financial information, options, decision support and referral services.