Increased costs as a result of pressures on the wold economy and difficulty in recruiting workers in recent years because of the pandemic have placed considerable financial stress on farmers.

The Farm Debt Mediation Act (2011) protects farmers and provides for mediation to resolve farm debt disputes taking other enforcement action under a farm mortgage.

To strengthen farmers’ rights to farm debt mediation and streamline the process, important changes to the Farm Debt Mediation Act 2011  will soon take effect.

Under the Act, a farmer has the right to be offered mediation by their creditor before the creditor can start debt recovery on their farm mortgage. At mediation, an independent mediator helps a farmer and their creditor to confidentially reach an agreement about farm debt arrangements – without the high costs, stress and lengthy delays that come with legal recovery proceedings.

From 31 October 2022, the changes that will take effect include the following:

  • The definition of ‘farming operation’ will include aquaculture and forestry and timber production, ensuring more farmers are protected.
  • The Victorian Small Business Commission (VSBC) will take on administrative responsibilities for the Farm Debt Mediation Scheme from Agriculture Victoria. This means that guidance, processes and forms for farm debt mediation will be available on the VSBC website and the VSBC will be the first point of contact for any queries.
  • Farmers will have greater rights, as creditors will be required to obtain an exemption certificate in all instances before taking enforcement action (recovering debt on a farm mortgage), including when a farmer hasn’t responded to their offer to mediate.
  • The VSBC will have some discretion when it comes to issuing exemption certificates and prohibition certificates (which stop creditors from taking enforcement action). For example, the VSBC could refuse to issue an exemption certificate if they’re satisfied that the farmer is justified in not having undertaken mediation and intends to do so within a reasonable timeframe.

Small Business Commissioner Lynda McAlary-Smith said, “It’s vital that Victorian farmers are aware of their greater rights and protections that will take effect this month, and what creditors will be required to do before they can start to recover debt on a farm mortgage. The Victorian Small Business Commission is here to answer any questions farmers might have about the benefits of mediation and what these important changes mean.”

The VSBC will keep providing early help to farmers and creditors, which includes discussing rights and obligations when it comes to mediation, informing farmers about the free and independent support offered by the Rural Financial Counselling Service and arranging a suitable time and place for mediation to happen.

More information will be made available on the VSBC website from 31 October 2022.