A Welcome Relief for Farmers

The government has acknowledged that farmers face many risks outside their control such as climate change, biosecurity threats and international market changes that can affect their ability to pay debt on time.

The newly-introduced Farm Debt Mediation Bill aims to help farmers struggling with debt. It aims to provide fair, timely resolution of issues around farm debt between creditors and debtors. 

The objectives of the Bill are to:

Support farmers in financial distress in their involvement with secured creditors

Make it possible to explore options for turning around a failing farm business, and

Allow farmers with an unviable business to 'exit with dignity'.

The proposed legislation will require creditors with security interests in farm property (land, livestock, plant and harvested goods) to offer farmers who default on payments, mediation services before they take enforcement action. It will also allow farmers to initiate mediation before default occurs.

There will be no obligation on either a farmer or a creditor to participate in the mediation. However, there are mechanisms for both parties if mediation is declined. For example, if a farmer declines mediation when defaulting, the creditor may apply for an Enforcement Certificate that will allow enforcement action to be taken pursuant to the loan agreement. Conversely, if the creditor declines mediation upon request by the farmer, the farmer can apply for a Prohibition Certificate, which will prevent the creditor from taking any enforcement action for that debt for a period of six months. 

The Bill is currently expected to become law before the end of 2019, with farmers having access to the Mediation Scheme from 1 October 2020.


DISCLAIMER: All the information published in Rural eSpeaking, No 30 Spring 2019 is true and accurate to the best of the authors' knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this article. Views expressed are those of individual authors, and do not necessarily reflect the view of this firm. Articles appearing in Rural eSpeaking, No 30 Spring 2019 may be reproduced with prior approval from the editor and credit given to the source.  Copyright, NZ LAW Limited, 2019. Editor: Adrienne Olsen. E-mail: adrienne@adroite.co.nz. Ph: 029 286 3650 or 04 496 5513.