Farm Debt Mediation Bill
The Farm Debt Mediation Bill (No. 2) is a proposed law change. If it becomes law, it will require secured creditors who lend money to farmers to offer mediation to farmers if they default on payments, before taking enforcement action. Find out more about the Bill.
On this page:
- Objectives of the Bill
- How mediation would work
- Who can use the mediation service
- Fees and charges
Make a submission
The Primary Production Committee is calling for public submissions on the Farm Debt Mediation Bill (No. 2). Submissions are open until 7 August 2019.
Risks that are outside of farmers' control (like climate change, biosecurity threats, and international market changes) can affect their ability to pay debt on time. The Farm Debt Mediation Bill aims to help farmers struggling with debt. It aims to provide fair, timely resolution of issues around farm debt between creditors and debtors.
If the Bill is approved, it will create a mandatory mediation scheme. The scheme will mean secured creditors will have to offer mediation to farmers who default on payments. The creditors will have to offer mediation before they take enforcement action on any debts.
Farmers would also be able to request mediation at any time.
You can read the Bill on the New Zealand Legislation website.
When we expect the changes to happen
We expect the Bill to become law before the end of 2019. Farmers and lenders will have the chance to have their say on the Bill during the Select Committee stage.
When we expect the mediation service to start
We expect farmers will be able to access farm debt mediation from 1 October 2020.
The objectives of the Bill are to:
- support farmers in financial distress in their involvement with secured creditors
- make it possible to explore options for turning around a failing farm business
- allow a farmer with an unviable business to ‘exit with dignity’.
The Ministry for Primary Industries (MPI) would administer the scheme and:
- ensure the efficient operation of the scheme (like setting rules and issuing certificates)
- oversee mediators
- ensure farmers have ready access to the financial support and business planning support they need
- raise and maintain awareness of the scheme
- monitor, evaluate, and report on the effectiveness of the scheme, with a view to continuous improvement in the scheme's performance.
Farmers and creditors would have up to 60 working days to complete the mediation process, unless both parties agree to extend.
If lenders don't want to take part in mediation, then the farmer can apply for a Prohibition Certificate. This means the lender won't be able to take any enforcement action on the debt for 6 months. After 6 months, the lender would need to offer mediation before enforcement can be taken.
The mediation scheme will apply to farm businesses engaged in agriculture, horticulture, or aquaculture. It will also apply to farm businesses engaged in any primary production activity done in connection with these.
What loans it covers
The scheme will apply to loans that are secured against farmland, farm machinery, livestock, and harvested crops and wool.
The scheme doesn't cover debt linked to lifestyle farms, forestry, wild harvest fishing, and hunting or trapping of animals.
We expect each mediation case to cost around $6,000. This would be split between the lender and the farmer.
Find out more
- Frequently asked questions [PDF, 360 KB]
- Government media release: New scheme for financially distressed famers
Policy and design decisions (from December 2018)
- Cabinet paper [PDF, 1.2 MB]
- Cabinet paper Appendix 1 – Parties consulted [PDF, 606 KB]
- Cabinet paper Appendix 2 – Detailed design of the Farm Debt Mediation Scheme [PDF, 951 KB]
- Regulatory impact statement [PDF, 3.6 MB]
- Cabinet Economic Development Committee – Summary [PDF, 721 KB]
- Cabinet Economic Development Committee – Minute [PDF, 714 KB]
Legislation design decisions (from June 2019)
- Cabinet approval [PDF, 1.4 MB]
- Regulatory impact statement [PDF, 6.2 MB]
- Key themes from targeted consultation and final policy approvals [PDF, 888 KB]