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When rural farm debt requires solutions

All businesses have their financial ups and downs and farming businesses are no exception. A new act, the Farm Debt Mediation Act 2019, is designed to assist, while also avoiding the spotlight which often publicly shines when debt needs addressing.

The mediation services under this Act are under the control of the Ministry for Primary Industries who are able to provide independent mediators. Those mediators are an integral part of a process that is structured to confidentially assist secured creditors (primarily banks) and their farming borrowers to attack debt related problems when those issues initially arise.

While mediation decisions are not necessarily binding and do not always produce an agreed result, they are today a compulsory first step in a process looking to point farmers and their lenders in the right direction when loan repayment becomes a problem.

There are often many strands around farm debt, with an end result of preventing the parties from separating out the wood from the trees.

Legal advisors are often introduced to these types of debt problems early and therefore have a role to play in advocating at a mediation while helping their farming clients prepare for one.

There are always cash flow issues in rural businesses. Down times between seasons and the like. Stress levels rise with loan concerns at certain times, freezing borrowers into inaction. This mediation gets the parties talking.

Primary production businesses involved in agriculture (including sharemilkers), apiculture and horticulture should all be up to speed with this possible solution.

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