Three years after the highly-publicised banking and financial services Royal Commission, one of its strong recommendations on debt management has been enacted - a nationwide guide for farm debt mediation.
To improve the consistency of farm debt mediation arrangements across all states, the national "better practice guide" has been developed in consultation with bankers, farmers, mediation specialists and rural financial counsellors.
The guide outlines key principles to consider when dealing with farm debt mediation or, more broadly, financial difficulty, with the aim of achieving more consistent and efficient results for farmers and lenders.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommended a national scheme of farm debt mediation to replace the varying arrangements enforced by different states.
Currently, NSW, Victoria, Queensland and South Australia have legislated FDM schemes in place. Western Australia operates a voluntary scheme but no government-enforced arrangements exist in Tasmania or the Northern Territory.
Latest Australian farm borrowing estimates are around the $100 billion mark after lending rose six per cent in 12 months to hit a record $94b in 2020-21.
RELATED READING
The Department of Agriculture, Fisheries and Forestry's farm resilience first assistant secretary, Melissa Brown, said the national guide introduced a set of uniform principles to assist those involved in debt mediation.
"The guide seeks to encourage transparent and nationally consistent practices of debt resolution across states" Ms Brown said.
"The outcome will be greater certainty and improved opportunities to achieve equitable outcomes for our farmers and their lenders.
Australian Banking Association chief executive officer, Anna Bligh, said banks were always looking for ways to better support customers during times of financial difficulty.
"This guide is a great example of a resource that will work to help farmers re-establish and maintain their viability, and support best practice in farm debt mediation across Australia," she said.
National Farmers' Federation CEO, Tony Mahar, said the guide's arrival was particularly timely.
Many primary producers were contending with damaging weather events and would need to negotiate paths forward with their lenders in a higher interest rate environment in 2023.
"Ensuring farm debt mediation is conducted on an equal playing field allows more opportunity to reach an outcome that is fair and equitable for all involved," Mr Mahar said.
"The guide's consideration of personal issues, such as mental and physical health also improves holistic support for farmers who may find their business in financial distress."
A tailored summary of the guide has also been developed specifically for farmers, as well as a comparison summary of state FDM schemes to assist stakeholders operating across multiple jurisdictions.
- Information about the guide is available at: https://www.agriculture.gov.au/agriculture-land/farm-food-drought/drought/approach_to_farm_debt_mediation
Start the day with all the big news in agriculture! Sign up below to receive our daily Farmonline newsletter.
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
