Queensland Farmers have the protection of a compulsory farm debt mediation program that came into effect on 1 July 2017.
The program provides a resolution process for farm debt disputes, which will be managed by the Queensland Rural and Industry Development Authority (formerly the Queensland Rural Assistance Authority).
As a compulsory system, banks or other lenders must engage in mediation with farming enterprises before taking any enforcement action to recover farm business debts.
Each party must pay their own legal costs and share of the mediation costs, however by taking advantage of the mediation process, farming businesses will have a better opportunity to work with their lenders to reach an agreement on debt management before enforcement action is taken.
The mediation requirement will apply relatively broadly to mortgages over farming property including both land and water allocations and the full range of farming activities.
Other changes that came into effect on 1 July include:
- The name change from QRAA to QRIDA
- Increased research and policy functions for QRIDA with a focus on farm finance matters
- A rural debt survey to better understand the issue
- The creation of a Farm Debt Restructure Office with specific functions yet to be determined
In our experience, early negotiations with banks leads to more positive outcomes for farmers, and with the backing of the new compulsory mediation program, farmers now have more opportunity to do that in a structured way.