We believe the Farm Debt Mediation Act can be useful for a limited range of farmers with mortgages to banks. Those farmers need to be running viable farms who are confronting financial distress (such as unexpected flooding) which can be best alleviated through “buying time” and not heavily penalised during that time. The Farm Debt Mediation Act forces banks into a mediation process.
A mediation process can be very valuable if the following criteria are met:
- A mediation is conducted in an atmosphere where the bank is compelled to acknowledge the rights of the farmer and respect the role of the farmer.
- The farmer’s representative at the mediation is able to demonstrate that the law including the Farm Debt Mediation Act gives some power in a negotiation process which is part of mediation to the farmer.
- The farmer has a sensible strategy which is financially sound for the farming enterprise and its stakeholders (being the farmer and the bank).
- The farmer does not surrender to the bank too much control of the business or the farm, merely because the stress of the debt has become too heavy a burden on the farming family or business.
Farmers who can most benefit from mediation under the Farm Debt Mediation Act are those that are prepared to utilise professional services in the conduct of the mediation in the same way that they use professional services in other aspects of their farm business. For example, many successful dairy farmers use nutritionists to monitor the health of their livestock, agricultural scientists to monitor the health of their pastures and crops.
These farmers will identify the management of a farm mortgage in the same way as they identify the management of their crops and livestock. An accountant can be a valuable manager of farm debt but most accountants confine their role to reporting of financial outcomes rather than managing the mortgage as a cost input. Accountants often do not have the motivation, interest or skills to represent a farmer in a contest with the bank.
The skills required to negotiate on behalf of a person (a farmer) with an obviously weaker bargaining position than a bank must not be underestimated. We believe we can offer those skills to a farmer if we are properly instructed. Cost on most negotiations for a mediation is $5,000 to $10,000. For some free information on the Act please email a request to firstname.lastname@example.org.