How farm debt mediation works
Find out how the Farm Debt Mediation Scheme works for farmers and for creditors.
Requesting farm debt mediation
Requests for mediation can be made by farmers or their creditors.
Using the farm debt mediation scheme [PDF, 421 KB]
Under the Farm Debt Mediation Act 2019:
- secured creditors must offer mediation before they can take enforcement action on a farmer who defaults on payments
- farmers can request mediation at any time
- requests and replies must be in writing.
Requests for mediation can be accepted or declined.
If the request to mediate is accepted, the farmer selects 3 mediators from the authorised mediators list. The creditor then contacts one of the mediators the farmer selected to check whether they are available.
If the mediator is available, they will start organising the mediation process. The mediator will send an invitation to mediate to both parties.
If the mediator is not available, the creditor contacts one of the others that the farmer selected.
The farm debt mediation process
Farmers and creditors have 60 working days to complete the mediation process. This starts when the invitation to mediate is accepted in writing. The 60-day period can be extended if both parties agree.
Step-by-step guide to Farm Debt Mediation [PDF, 308 KB]
It is important all parties in mediation take part in good faith.
Where possible, a mediation agreement is produced at the end of the mediation process. This sets out the agreed actions for management of the debt. The agreement must be agreed to by both sides, and is binding.
It's possible that a mediation agreement won't be reached. When this happens, the parties can apply for a determination on whether enforcement action can proceed.
The mediator will also produce a mediation report for MPI. This confirms the process used for the mediation and is available to the mediating parties.
Mediation report template [PDF, 891 KB]
Administrative review application form [PDF, 475 KB]
A tikanga-based approach is also available
The Farm Debt Mediation Scheme allows mediation to include tikanga principles. This should be discussed in pre-mediation meetings. It must be included in the mediation procedure agreement. This makes sure all parties agree on how mediation will be conducted.
A tikanga-based approach to mediation recognises that there are differences in applying tikanga across different rohe, but the principles remain consistent across Aotearoa.
The Farm Debt Mediation Scheme – Tikanga principles [PDF, 1.6 MB]
If the creditor declines mediation
If a creditor turns down a farmer's request for mediation, the farmer can apply for a prohibition certificate. This stops the creditor from taking enforcement action on the debt for 6 months.
After 6 months, the creditor will have to offer mediation before taking any enforcement action.
Prohibition certificate application form [PDF, 482 KB]
If the farmer declines mediation
If a farmer turns down a creditor's request for mediation, the creditor can apply for an enforcement certificate. This lets the creditor take enforcement action in line with the loan agreement.
The enforcement certificate has a duration of 3 years. The farmer cannot request mediation for that debt until the certificate expires.
Enforcement certificate application form [PDF, 479 KB]
If there is no agreement after mediation
If both parties mediate in good faith but there is no agreement then the creditor can apply for an enforcement certificate. This lets the creditor take enforcement action in line with the loan agreement.
Fees and charges
The average cost of farm debt mediation is around $6,000.
Under the scheme, farmers and creditors share this equally but the maximum farmer contribution is $2,000. After this point, the creditor will have to meet the balance. This helps to ensure fair and reasonable access to mediation for financially struggling farmers.
Farmers who are facing extreme hardship may apply for help from the Mediation Hardship Fund.