Creditor's obligations

Before commencing enforcement action under a farm debt, a creditor must advise the farmer of their entitlement to request mediation.

To do so, a creditor must send to a farmer:

  • Form 1 – Notice of availability of mediation
  • Form 2 - Farmer's response to creditor's Form 1
  • Form 8 – Notice of farmer’s decision not to enter into or proceed with mediation (to allow the farmer to respond)
  • additional information about the Farm Debt Mediation
  • contact details for Rural Business Support  financial counselling service.

All forms relating to Farm Debt Mediation can be found by clicking here.

A flow chart below shows the steps to follow for a creditor initiated Farm Debt Mediation.

Farm Debt Mediation - Creditor Initiated

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FDM - Creditor Initiated

Farm Debt Mediation - Creditor Initiated

Creditors are required to offer mediation to farmers before commencing debt recovery proceedings on farm mortgages in default and must write to the farmer advising that mediation is available.

A farmer has 21 days from the date of the offer to mediate to respond. If the farmer does not respond, or refuses mediation, a creditor can commence recovery action as normal.

Under the Farm Debt Mediation Act 2018 (the Act) creditors are required to offer mediation to farmers before commencing debt recovery proceedings on farm mortgages in default and must write to the farmer advising that mediation is available.

The Act applies 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.

Creditor is to provide Form 1 - Notice to farmer - notice of availability of mediation to farmer:

Form 1 advises the farmer that:

  • the creditor intends to take enforcement action
  • the farmer is entitled to request mediation with the creditor
  • mediation is low cost and organised by the Office of the South Australian Small Business Commissioner
  • the farmer has 21 days from the date the notice was given to request mediation.

Along with Form 1 the creditor is required to also include:

  • Form 2 to allow the farmer to request mediation
  • Form 8 to allow the farmer to refuse mediation
  • links to information about mediation at the SASBC  - ADD LINK
  • the contact details for Rural Business Support which provides free rural financial counselling.

All Farm Debt Mediation forms can be found here.

A farmer has 21 days from the date of the offer to mediate (Form 1) to respond.

If the farmer does not respond, or refuses mediation (Form 8), a creditor can commence recovery action as normal.

All Farm Debt Mediation forms can be found here.

If the farmer agrees to mediation, they respond in writing to the creditor's offer using a Form 2.

Once Form 2 is received, the creditor:

  • completes Form 4 and returns a copy to the farmer within 21 days

All Farm Debt Mediation forms can be found here.

Where both parties wish to participate in mediation, the creditor must notify the Small Business Commissioner within 10 days using:

  • Form 5 and completed copies of:
    • Form 1
    • Form 2 or 3
    • Form 4

Forms to be sent to sasbc@sa.gov.au via email or post to GPO Box 1264, Adelaide SA 5001

All Farm Debt Mediation forms can be found here.

Once the Small Business Commissioner receives a request to mediate a case officer contacts the farmer and the creditor and provides both parties with preliminary assistance. This includes discussing the objectives of mediation, the responsibilities of both parties, and arranging a mutually acceptable time and place for mediation.

Mediation is provided by independent trained and experienced mediator organised through the Office of the South Australian Small Business Commissioner.

The mediator acts as a neutral and independent person, and will work to assist farmers and creditors try to reach an agreement about current and future debt arrangements.

At the conclusion of the mediation, the farmer and creditor may agree to sign a binding agreement to resolve the dispute. The creditor must ensure that any binding agreement between the parties is reflected in any contract, deed, mortgage or other instrument.

Once mediation takes place, and the mediation has been:

  • successful and dispute resolved:
    • the farmer and creditor may agree to sign a binding agreement to resolve the dispute. The creditor must ensure that any binding agreement between the parties is reflected in any contract, deed, mortgage or other instrument.
  • unsuccessful and dispute not resolved:
    • The creditor may apply to the Small Business Commissioner for an exemption certificate on a Form 7. If the Small Business Commissioner considers that satisfactory mediation has taken place, an exemption certificate will be issued, allowing the creditor to commence recovery action.

All Farm Debt Mediation forms can be found here.

Farm Debt Mediation - Farmer Initiated

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FDM - Farmer Initiated

The Act allows a farmer to initiate mediation.

The farmer does not have to be in default to request mediation with their creditor.

A creditor may accept or refuse an offer to mediate. If the creditor refuses to mediate and the farmer is in default, then the farmer may apply for a prohibition certificate. This will prohibit a creditor from commencing enforcement action for up to six months or until the day on which the farmer and creditor later enter into mediation.

A creditor may receive a request from a farmer to mediate. A farmer does not have to be in default to request mediation.

Form 3 advises a creditor that a farmer is requesting mediation.

With Form 3 the farmer also sends the creditor:

  • Form 4 - Notice to farmer - creditor's agreement or refusal to enter into mediation
  • Form 5 - Notice to the Small Business Commissioner - notice that mediation is required

A creditor does not have to enter into mediation with a farmer who is not in default and can refuse using Form 4.

All Farm Debt Mediation forms can be found here.

A creditor has 21 days to respond with Form 4 to the farmer.

If the creditor does not respond, a farmer can, if they are in default , apply for a prohibition certificate.

All Farm Debt Mediation forms can be found here.

Where both parties wish to participate in mediation, the creditor must notify the Small Business Commissioner within 10 days using:

  • Form 5 and completed copies of:
    • Form 2 or 3
    • Form 4

Forms to be sent to sasbc@sa.gov.au via email or post to GPO Box 1264, Adelaide SA 5001

All Farm Debt Mediation forms can be found here.

Once the Small Business Commissioner receives a request to mediate a case officer contacts the farmer and the creditor and provides both parties with preliminary assistance. This includes discussing the objectives of mediation, the responsibilities of both parties, and arranging a mutually acceptable time and place for mediation.

Mediation is provided by independent trained and experienced mediator organised through the Office of the South Australian Small Business Commissioner.

The mediator acts as a neutral and independent person, and will work to assist farmers and creditors try to reach an agreement about current and future debt arrangements.

At the conclusion of the mediation, the farmer and creditor may agree to sign a binding agreement to resolve the dispute. The creditor must ensure that any binding agreement between the parties is reflected in any contract, deed, mortgage or other instrument.

Once mediation takes place, and the mediation has been:

  • successful and dispute resolved:
    • the farmer and creditor may agree to sign a binding agreement to resolve the dispute. The creditor must ensure that any binding agreement between the parties is reflected in any contract, deed, mortgage or other instrument.
  • unsuccessful and dispute not resolved:
    • The creditor may apply to the Small Business Commissioner for an exemption certificate on a Form 7. If the Small Business Commissioner considers that satisfactory mediation has taken place, an exemption certificate will be issued, allowing the creditor to commence recovery action.