Farm Debt Mediation Scheme

This scheme makes it compulsory for banks and other creditors to offer mediation to farmers before commencing debt recovery proceedings on farm mortgages.

Farm debt mediation is a structured negotiation process where a neutral and independent mediator assists the farmer and the creditor to try to reach agreement about current and future debt arrangements. The mediator's role is to facilitate the discussion and they will not provide advice on the matters in dispute. Mediation is a simple, voluntary and confidential process that is quick, accessible and affordable.

There are two types of mediation available:
1. Creditor initiated mediation
- Creditors must send notice under section 8 of the FDM Act to farmers alerting them that mediation is available before initiating debt recovery on farm mortgages. Farmers have 21 days to respond to an offer to mediate.
- If a farmer does not respond to the offer to mediate a creditor can commence recovery action on the farm mortgages.
- If a farmer agrees to mediate, a creditor will not be able to commence recovery action until mediation has concluded to the satisfaction of the Victorian Small Business Commissioner.

2. Farmer initiated mediation
- A farmer takes the initiative to request mediation with their creditor. While a farmer may initiate a request for mediation, a creditor is only obliged to mediate if a farmer is in default.

The cost of mediation is currently $195 per session for each party. The Victorian government subsidises the full cost of mediation making it significantly lower than market price. Parties are responsible for their own costs in preparing for and attending mediation.

It is recommended that farmers seek assistance from their local Rural Financial Counsellor, Solicitor, Accountant or some other appropriately qualified person.

Eligible applicants include Victorian farmers with farm mortgages covering a farm (or part of a farm), farm machinery or a water share (within the meaning of the Water Act 1989).

A farmer is defined as ''a person (whether an individual person or a corporation) who is solely or principally engaged in a farming operation''. This includes people who own land cultivated under a share-farming agreement, or the personal representatives of a deceased farmer.