The Ministry for Primary Industries (MPI) is taking steps to establish the new Farm Debt Mediation Scheme, which will begin operating on 1 July 2020.
From next week MPI will be able to consider applications from mediation organisations wanting to take part in this scheme.
"We've already heard from leading mediation organisations that are interested in participating. If an organisation is approved, they will then make sure their mediators are trained for the new scheme," says Karen Adair, MPI's deputy director-general of Agriculture and Investment Services.
The Farm Debt Mediation Act became law on 13 December 2019 and brings a new approach to farm debt mediation.
Karen Adair says the Farm Debt Mediation Scheme will help provide a way forward when a farm business comes under financial stress. "It will ensure a fair mediation process takes place with an independent, neutral mediator and all the key people around the table."
In particular, the new Farm Debt Mediation Scheme is designed to address any power imbalance between stressed farm businesses and their creditors. Creditors will be required to offer mediation to farmers before they can take action on a debt default.
"This provides the best chance that everyone involved can reach agreement on a good way forward. This may be a way to turn things around or, in some cases, to wind down the business," says Karen Adair.
"There are 2 key dates for us – the first is being ready to approve mediation organisations to take part in the Farm Debt Mediation Scheme from 1 February, and the other is being open for business for farmers and creditors on 1 July.
"We don't want to completely re-invent the wheel for farm debt mediation, and the processes we are designing will be familiar for current mediators. We will require mediators to have farm business and rural sector knowledge, and we want good regional coverage.
"Two organisations, the Arbitrators' and Mediators' Institute of New Zealand and the Resolution Institute, have advised MPI they are intending to apply to be approved mediation organisations under the new legislation. They are jointly developing a day-long seminar in mid-February to train existing mediators."
One feature of the Farm Debt Mediation Scheme will be that, if a farmer prefers, mediation can be based on tikanga Māori (protocols).
"This could help get better engagement and outcomes. This is timely, too: the need to provide for mediation according to tikanga was highlighted by the Family Justice Review report in May 2019. We are working with mediators who are experienced and knowledgeable in tikanga to set this up."