Farm Guide VIC : 2012-13
Farm Debt Mediation -- Talk can be cheaper 103 Support Services Talk can be cheaper. That's the principle behind the Victorian Government's Farm Debt Mediation Scheme. On December 1, 2011, the Farm Debt Mediation Act 2011 came into effect. The Victorian legislation means that banks and other creditors must offer to undertake mediation with farmers before they can initiate debt recovery on farm mortgages. What is farm debt mediation? Farm debt mediation is a structured negotiation process where a neutral and independent mediator assists the farmer and the creditor to try to reach agreement about current and future debt arrangements. The mediator's role is to facilitate the discussion and they will not provide advice on the matters in dispute. Mediation is a simple, voluntary and confdential process that is quick, accessible and affordable. The scheme is administered by the Department of Primary Industries and the mediation services are arranged by the Offce of the Victorian Small Business Commissioner (VSBC). The cost of mediation is $195 per session for each party. This is signifcantly lower than market price and is subsidised by the Victorian Government. Parties are responsible for their own costs in preparing for and attending mediation. How does farm debt mediation work? The Act provides a structured process that creditors and farmers follow to initiate and undertake mediation. There are two types of mediation available under the Act. The frst is creditor initiated mediation. Creditors must send notice under section 8 of the Farm Debt Mediation Act 2011 to farmers alerting them that mediation is available before initiating debt recovery on farm mortgages. Farmers have 21 days to respond to an offer to mediate. If a farmer does not respond to the offer to mediate a creditor can commence recovery action as per the farm mortgages. If farmers are planning to be away from their farm at a time when they believe there is a risk a creditor may seek to commence recovery action, then it is very important to ensure someone is checking their mail. If a farmer agrees to mediate, a creditor will not be able to commence recovery action until mediation has concluded to the satisfaction of the Small Business Commissioner. The second is farmer initiated mediation, where a farmer takes the initiative to request mediation with their creditor. While a farmer may also initiate a request for mediation, a creditor is only obliged to mediate if a farmer is in default. Following mediation or when a farmer refuses to mediate the creditor may apply to the Small Business Commissioner for an exemption certifcate. Once an exemption certifcate is issued, the creditor can commence enforcement action. If granted, this certifcate will last at least three years exempting the creditor from having to offer mediation in the future. If a creditor is refusing to mediate and the farmer is in default, the farmer may apply to the Small Business Commissioner for a prohibition certifcate. If granted, a prohibition certifcate remains in place for a period of six months or the day on which the farmer and the creditor enter into mediation. During this time, the creditor is precluded from undertaking enforcement action.