Farmers and creditors
What we do
Under the Farm Debt Mediation Act 2011 (the Act), the Victorian Small Business Commission (VSBC) provides early help to farmers and creditors who have agreed to mediate their farm debt dispute and arranges mediation between parties.
At mediation, an impartial and experienced mediator helps the farmer and creditor to negotiate and reach agreement about current and future debt arrangements in confidence, without the need for court.
Before a creditor can start to recover debt on a farm mortgage, they must notify the farmer in writing that:
- they intend to take enforcement action and
- mediation is available and
- the farmer has 21 days from the date they receive the offer to mediate to respond.
If the farmer doesn’t respond within 21 days, the creditor can start debt recovery action.
A farmer can also apply to the VSBC for mediation with their creditor. The farmer doesn’t need to be in default to do so, though the creditor is only obliged to mediate if a farmer is in default.
Exemption and prohibition certificates
A creditor can apply to the VSBC for an exemption certificate to enable them to start enforcement action after mediation or where a farmer refuses to mediate.
The VSBC can issue this certificate where we are satisfied that the farmer is in default, no prohibition certificate is in force and either:
- satisfactory mediation has happened for the farm debt matter or
- the farmer has refused to mediate or
- it has been at least three months since the creditor notified the farmer and throughout that period, the creditor has attempted to mediate in good faith but no satisfactory mediation has happened.
A farmer can also apply to the VSBC for a prohibition certificate to stop a creditor from taking enforcement action until satisfactory mediation has happened. A farmer can do so if:
- they are in default and
- the creditor has refused to mediate or failed to respond to a request to mediate within 21 days of the farmer making the request.
How we can help
When an application for mediation is received, we contact the farmer and creditor and provide both parties with early help.
- discussing the aims of mediation
- giving both parties advice about their rights and obligations in relation to mediation
- encouraging open communication between the farmer and creditor
- determining a mutually acceptable time and place for their mediation session.
Where farmers are not represented, we will recommend they contact their local Rural Financial Counselling Service (RFCS).
The RFCS is a free service that can provide a rural financial counsellor to help a farmer prepare for mediation, assist them on the day and help them with any actions that need to be undertaken after mediation. Help includes providing emotional support, financial analysis and scenarios, and guidance on options for resolving the matter.
A rural financial counsellor can also help farmers who are experiencing financial difficulty though might not need mediation under the Act.
Farm debt mediations can be held at the VSBC’s Melbourne office or at locations across regional Victoria, depending on the needs of the farmer and creditor.
The fee for mediation is $195 per party for each session, making it a low-cost alternative to litigation.
Applying for mediation
All farm debt mediation documents and the Farm Debt Mediation Act 2011 can be found on the Agriculture Victoria website.
For more information, contact Agriculture Victoria’s Farm Debt Mediation Officer on 136 186 or at firstname.lastname@example.org.