A consistent approach to farm debt mediation

The National Better Practice Guide for Farm Debt Mediation has been released.

First Assistant Secretary of Farm Resilience, Melissa Brown, said the guide provides further national consistency by introducing a set of uniform principles to assist those involved in farm debt mediation (FDM).

“The guide seeks to encourage transparent and nationally consistent practices of debt resolution across states” Ms Brown said.

“The outcome will be greater certainty and improved opportunities to achieve equitable outcomes for our farmers and their lenders.

The guide was developed by the Australian Government in consultation with stakeholders, including Australian Banking Association and National Farmers’ Federation.

CEO of Australian Banking Association, Anna Bligh, said banks are always looking for ways to better support customers during times of financial difficulty.

“This guide is a great example of a resource that will work to help farmers re-establish and maintain their viability, and support best practice in farm debt mediation across Australia,” Ms Bligh said.

CEO of National Farmers’ Federation, Tony Mahar, said the guide could not come at a better time as many farmers contend with damaging weather events and will need to negotiate paths forward with their lenders.

“Ensuring farm debt mediation is conducted on an equal playing field allows more opportunity to reach an outcome that is fair and equitable for all involved,” Mr Mahar said.

“The guide’s consideration of personal issues, such as mental and physical health also improves holistic support for farmers who may find their business in financial distress.”

A tailored summary of the guide has also been developed specifically for farmers, as well as a comparison summary of state FDM schemes to assist stakeholders operating across multiple jurisdictions.

To read the guide or for more information visit: https://www.agriculture.gov.au/agriculture-land/farm-food-drought/droug…

Fast Facts

• FDM refers to a structured negotiation process between a farmer and their lender to resolve a farm debt issue with the use of an independent mediator to assist both parties.
• The guide outlines 7 principles for parties involved in FDM activities:
  • Principle 1: Early engagement between farmers and lenders is encouraged.
  • Principle 2: Farm debt resolution activities should be outcomes-focused.
  • Principle 3: Consider support for personal issues, including mental and physical health.
  • Principle 4: Information about FDM should be clear and accessible.
  • Principle 5: Farmers should seek appropriate support and independent professional advice.
  • Principle 6: FDM should be conducted on an even playing field.
  • Principle 7: All parties are expected to act in good faith.
• Agricultural loans and leases totalled $94 billion at 30 June 2021—an increase of around 6% or $5 billion from 30 June 2020.
• In 2020–21 there were 129 instances of farm debt mediation and 10 new foreclosures.