Farm Debt Mediation: Information for Farmers
Farmer's rights
If a farmer receives an offer to mediate from a creditor (Form 1 Section 8 Notice), the farmer may request mediation to discuss the farm debt.
It is important for farmers to be aware of time frames. A farmer has 21 days from the date of the Notice to respond to an offer to mediate. If a farmer wishes to accept an offer they may send Form 2 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 immediately proceed with debt recovery. If the farmer does not wish to mediate or continue with mediation they may send Form 6 to their creditor or to the Department of Primary Industries.
Farmer initiated mediation
Under the scheme, a farmer can also initiate mediation with their creditor. To do this, a farmer may send Form 7 to the creditor requesting mediation. A creditor has 21 days to respond to the request by responding in writing using Form 8.
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 10.
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
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.
Prohibition certificates
A prohibition certificate may be issued by the Small Business Commissioner when a creditor refuses to enter into mediation when the farmer has requested mediation and the farmer’s loans are in default. A creditor must not commence enforcement action against a farmer if a prohibition certificate has been issued. A prohibition certificate remains in place for 6 months or until the day on which the farmer and creditor enter into mediation.
Record keeping
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.
Seeking help
It is recommended that farmers seek assistance from their local Rural Financial Counsellor, Solicitor, Accountant or some other appropriately qualified person. These people can assist farmers to prepare for mediation, attend the mediation session with farmers and help farmers with any actions that need to be undertaken after the mediation session.
The Rural Financial Counselling service provides primary producers and small rural businesses that are experiencing hardship with free and impartial financial information, options, decision support and referral services.
- RFCS Victoria – North Central Phone: 03 5442 2424
- RFCS Victoria – Wimmera South West Phone: 03 5572 4540
- RFCS Victoria – Murray Mallee Phone: 03 5022 0799
- RFCS Victoria – Gippsland Phone: 03 5662 2566
- RFCS Victoria – Goulburn Murray Hume Phone: 02 6057 5777
More information
For more information about farm debt mediation or to initiate mediation call the Farm Debt Mediation Officer on 136 186.
