Information for farmers
Enforcement action on a farm debt cannot be commenced unless a creditor has issued to the farmer a Form 1 – Notice of Availability of Mediation.
It is important for farmers to be aware of time frames. A farmer has 21 days from the date the Form 1 was given to respond.
If a farmer wishes to accept an offer and exercise their entitlement to mediation, they must complete and send Form 2 - Farmer's Response to Creditor's Form 1 to the creditor advising that mediation is required.
Farmers are not obliged to participate in mediation. However, if they do not wish to participate or do not reply, a creditor can proceed with debt recovery. If the farmer does not wish to mediate or continue with mediation they may send a Form 8 – Farmer’s Decision not to Mediate to their creditor or to the Office of the Small Business Commissioner.
Farmers are strongly recommended to seek professional advice before waiving their rights to request mediation. Farmers should contact their Solicitor and/or Accountant and/or Rural Business Support (free call 1800 836 211 www.ruralbusinesssupport.org.au )
Farmer initiated mediation
Under the Scheme, a farmer can also initiate mediation with their creditor. To do this, a farmer may send Form 3 – Farmer–initiated Mediation Request to the creditor requesting mediation.
A creditor has 21 days to respond to the request by responding in writing using Form 4 – Creditor’s Agreement or Refusal to Mediate.
If the creditor refuses to mediate and the farmer is in default, a farmer may apply to the Small Business Commissioner for a Prohibition Certificate using Form 6 – Application for Prohibition Certificate.
There is no compulsion on either party to enter into mediation if the farmer is not in default.
Forms for mediation
To assist farmers and creditors with the process, approved forms are provided here.
Outcomes of mediation
Mediation outcomes will vary according to the circumstances of each case.The creditor is only required to make a genuine attempt to mediate in good faith. Creditors are not obliged to offer debt write-downs.The purpose of mediation is to give farmers and creditors a structured environment to discuss issues surrounding the farm debt. These discussions have no prescribed outcomes, and creditors are not obliged to offer concessions on the terms of the original loan agreement.
A Prohibition Certificate may be issued by the Small Business Commissioner when a creditor refuses to enter into mediation at the request of the farmer and the farmer's loans are in default. A creditor must not commence enforcement action against a farmer if a Prohibition Certificate is in force. A Prohibition Certificate remains in place for 6 months or until the day on which the farmer and creditor enter into mediation.
Both the farmer and the creditor should keep accurate records and evidence of the service of notices, together with copies of all notices served on each other.
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.
For more information about farm debt mediation or to initiate mediation call the Office of the Small Business Commissioner on 08 8303 2026 or toll free 1800 072 722.