Frequently asked questions

Farm Debt Mediation is a process where a farmer and their creditor work together with the help of a neutral mediator to sort out debt problems. The mediator helps both sides talk things through and, if they reach an agreement, makes it official. 

Farmers and creditors are encouraged to finish mediation within three months of starting. However, if both agree, they can take more time to complete it. 

Yes, a farmer can start a mediation process with their creditor by completing Form 5 Farmer Initiated Mediation

No. A farmer does not have to be in default to request mediation with their creditor, but should be aware that a farm debt can only be mediated once under this framework.

If the creditor says no to mediation and the farmer is in default on their loan, the farmer can apply for a prohibition certificate. This certificate stops the creditor from taking legal action on the farm mortgage and lasts for up to six months.

The Farm Debt Mediation scheme is for farmers facing financial troubles. It helps them work out agreements with creditors who have security over their farm assets. Getting involved early can offer more ways to protect the farm's value for both farmers and creditors. Creditors engage in the mediation scheme to follow a clear and efficient process for solving debt problems. 

The purpose of mediation is to helps farmers and creditors negotiate with the help of a neutral mediator to resolve debt issues.

• Starting Mediation:
  • Either the farmer or the creditor can start mediation.
  • Creditors must invite farmers in writing to mediate before taking enforcement action on a farm mortgage.
  • Farmers can also start mediation, even if they’re not in default of their loan. If the creditor refuses mediation, the farmer can get a certificate to stop the creditor from taking legal action for six months.
• Preparation: Both sides should be ready to explore all reasonable options and share necessary information.
• Advice: Farmers are encouraged to get independent advice, though they don’t need a lawyer.
• Mediation:
  • If both agree to mediate, it must follow the official procedures.
  • After mediation, the mediator will provide a summary of the mediation.
  • Agreement: If an agreement is reached the mediator will prepare a mediation agreement to be signed by both parties. Mediation agreements are legally binding.
  • No Agreement: If no agreement is reached but mediation was done properly, the creditor can apply for a certificate to proceed with enforcement action on the farm mortgage.

A Mediation Agreement is a legal document that details the terms both the farmer and creditor have agreed to during mediation. Both parties must sign it. This agreement must be followed in any future contracts or documents related to the debt, and failing to do so can result in penalties.

You can find examples of what’s included in such agreements at Mediation Agreements under the Farm Debt Mediation Act 2024 (Tas).

Participation in mediation is not mandatory for either farmers or creditors. If a farmer chooses not to mediate, the creditor can apply for an exemption certificate and proceed with legal action as per the loan terms. If a creditor refuses to mediate, the farmer can apply for a prohibition certificate that stops the creditor from taking legal action for up to six months.

Mediators are trained professionals who help farmers and creditors communicate and understand each other’s issues. Their job is to assist in reaching an agreement on current arrangements and, if needed, discuss how things will be handled in the future. Mediators are neutral and do not make decisions, make recommendation, provide options and impose rulings or solutions, or give legal advice. They don’t act as judges or decision-makers. 

The cost of mediation includes the mediator’s fees and other expenses like travel, accommodation, phone calls, and venue rental. The fee charged by the mediator is usually shared equally between the farmer and the creditor, but they can agree on a different way to split the costs if they choose. Each party must pay their own costs and expenses associated with participating in mediation. Any extra advice a farmer gets is an additional cost, so it’s a good idea to get a quote from the adviser first. On average, mediation costs about $6,000 in total, which means each party pays around $3,000 if the costs are split equally. 

Using the forms available on the website.

Guides are available to outline the process of mediation and which forms are needed at each stage of the process and are available on the Mediation Forms and Resources page.

The Farmer or Creditor must respond in an approved form to a notice inviting mediation within 20 business days of receiving the notice. 

The farmer must nominate a mediator to conduct mediation.

If the creditor rejects the first mediator, the farmer must nominate a list of three (3) alternate mediators. The creditor must select one from this list.

Both parties must agree on the location and time where the mediation will take place.

The creditor cannot nominate a mediator but can accept or reject a nominated mediator.

Both parties must agree on the location and time where the mediation will take place.

Building Tasmania has set up a list of approved Mediators. Mediators must have received accreditation under the National Mediator Accreditation System or Australian Mediator and Dispute Resolution Standards ; have an affinity, knowledge or practical experience with primary production, banking, finance, or farm business management; and understanding of the Tasmanian legislation.

When a mediation process is started, the farmer may choose their preferred mediator from a list of accredited mediators.

Tasmanian FDM legislation will apply to farmers engaging in farming operations that primarily involve agriculture (for example, crop growing and livestock or grain farming); aquaculture; and/or the cultivation or harvesting of timber or native vegetation.

The scheme will not apply to businesses that primarily involve wild harvest fishing or the hunting or trapping of animals in the wild.

The scheme will also not apply to “lifestyle” or hobby farming operations.

Farm machinery that is used for the purposes of a farming operation such as vehicles, machines or other implements and is secured under a farm mortgage is also covered under the Act.

As per the Australian Government Department of Agriculture’s Agricultural Lending Data publication, a loan or lease arrangement that is not subject to a regular repayment schedule is in arrears when it has remained continuously outside contractual or approved arrangements for 90 days.

A loan or lease arrangement that is subject to a regular repayment schedule is considered to be in arrears when:

• a)   at least 90 calendar days have elapsed since the due date of a contractual payment that has not been met in full; and
• b)   the total amount outside contractual arrangements is equivalent to at least 90 days’ worth of contractual payments.

The mandatory cooling off period is 10 business days. During the cooling off period, the farmer may withdraw the Mediation Agreement by serving written notice, signed by the farmer or the farmer’s solicitor.

Examples of the cooling off period statements can found on the Mediation Forms and Resources.

The purpose of mediation is to make reasonable attempts to reach an agreement. If an agreement cannot be reached, the creditor may apply for an Exemption Certificate that, allows enforcement action to be taken. 

Issued by the Farm Debt Mediation Commissioner, an Exemption Certificate states that the Act does not apply to a specified farm mortgage for three years. Once in possession of an Exemption Certificate, a creditor may begin enforcement action in relation to a secured farm debt if that debt is in default or a Mediation Agreement has been breached. 

Issued by the Farm Debt Mediation Commissioner, a Prohibition Certificate prohibits a creditor from taking enforcement action. A Prohibition Certificate stays in force for six months. 

Satisfactory mediation is defined in the Farm Debt Mediation Act 2024 as

a.         a mediation that has achieved a resolution of a matter involving a farm debt, or

b.         a mediation that has proceeded as far as it reasonably can in an attempt to achieve a resolution of a matter involving a farm debt but has nevertheless failed to resolve the matter, or

c.         a mediation specified or of a class described in regulations made for the purposes of this subsection to be a satisfactory mediation. Currently, there are no regulations under the Farm Debt Mediation Act 2024 (Tas).

The FDM Act defines enforcement action. It is defined as:

Enforcement action, in relation to a farm mortgage, means taking possession of property under the mortgage or any other action to enforce the mortgage, including the giving of any statutory enforcement notice, or the continuation of any action to that end already commenced, but does not include –

1. the completion of the sale of property held under the mortgage in respect of which contracts were exchanged before the commencement of Part 4 of this Act; or
2. the enforcement of a judgment that was obtained before the commencement of Part 4 of this Act

If an enforcement action is underway when the FDM Act comes into effect, the Creditor must obtain an exemption certificate before continuing this action unless the contracts of sale for property were exchanged before the commencement of the FDM Act or the enforcement of a judgement was obtained before the commencement of the FDM Act.

Enforcement action taken by a Creditor in respect of a farm debt in contravention of the FDM Act is void.