Important changes to Victoria’s farm debt mediation laws set to take effect
Important changes to Victoria’s Farm Debt Mediation Act 2011 (the Act) will soon come into force. The changes will affect farmer and creditor rights and obligations when it comes to farm debt mediation, streamline the process and align aspects of the legislation with other states.
The Act requires creditors to offer to undertake mediation with farmers before they can start debt recovery on farm mortgages. At mediation, an independent mediator helps the farmer and creditor to confidentially reach an agreement about farm debt arrangements – without the need for court.
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 information, guidance and approved forms for farm debt mediation will be available on our website and creditors will notify us directly of an agreement to mediate. The VSBC will also be the first point of contact for farm debt mediation 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, we could refuse to issue an exemption certificate if we are satisfied that the farmer is justified in not having undertaken mediation and intends to do so within a reasonable timeframe.
These and other important changes to farm debt mediation are part of the Agriculture Legislation Amendment Act 2022.
We 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, expert 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. If you have any queries about the upcoming changes, contact us.