Rural Business Support (RBS) has welcomed the State Government’s new Farm Debt Mediation Bill, helping to ensure better protection for South Australian producers experiencing severe financial difficulty.
The Farm Debt Mediation Bill 2018 has introduced legislation to require mandatory farm debt mediation to support farmers and provide them with improved protection and financial security.
RBS Chief Executive Officer Brett Smith said the legislation would help to safeguard farmers and provide a fair and transparent process for all parties.
“Ultimately we would expect to see an increase in the number of equitable resolutions of farm debt disputes as a result of South Australia having this legislation in place,” Mr Smith said.
“It gives SA producers the assurance of a formal structure for them to use if they find themselves in a situation where debt on their farm – their livelihood and home – has become unmanageable and all other avenues of negotiation with creditors have been exhausted.
“At the same time it will also provide benefits to providers as creditors are likely to have fewer rural customers defaulting on loans.”
Mr Smith said previously SA had lacked a legally enforceable bank mediation mechanism for primary producers which had, at times, proved “problematic”.
“This legislation is welcomed because it brings SA into line with Queensland, New South Wales and Victoria, where we’ve seen the mandatory process work well.”
Previously SA farmers have been reliant on a “good faith” voluntary code created by the former South Australian Farmers Federation (SAFF) more than a decade ago.
“The voluntary code agreed upon by the Australian Banking Association, Primary Industries and Regions SA (PIRSA), SAFF and the Rural Financial Counselling Service (RFCS) of SA in 2007 worked reasonably well, but it relied on the good faith of all parties involved – and it hasn’t always resulted in the best outcomes for farming families,” Mr Smith said.
“RBS Rural Financial Counsellors have encountered situations where mediation initially appeared to work, but then an unexpected escalation in farm debt has seen banks become less amenable.
“The opportunity for both farmers and creditors to utilise a structured but neutral mediation process to help them reach an outcome which is amenable to both parties can only be a positive thing.”
Mr Smith also acknowledged the “substantial support” of Small Business Commissioner John Chapman in supporting the new Bill.
As an indication of how the SA legislation may benefit farmers, a report into the NSW Farm Debt Mediation Act 1994 including results from farmers, creditors, mediators and other representatives showed that 72 per cent of farmers reached a settlement with their banks after the mediation process.
Positive settlements reported by farmers included:
• 37% refinanced debt;
• 27% of lenders gave the farmer more time to pay; and
• 23% lenders paid off part of the debt.
Additionally, 60.7% of farmers felt positive after farm debt mediation.
“We hope to see the Farm Debt Mediation Bill 2018 lead to similarly positive outcomes for SA farmers,” Mr Smith said.
For more information call 1800 836 211.
Brett Smith, Rural Business Support, Chief Executive Officer – 0412 630 015