Farm Debt Mediation in Tasmania

The Tasmanian Farm Debt Mediation Act 2024 (FDM Act) commenced operation on 4 December 2024. 

Under the FDM Act, a farm debt mediation scheme is implemented which makes it compulsory for creditors to offer mediation to farmers before commencing debt recovery proceedings on farm mortgages.

The purpose of the FDM Act is “to provide for the efficient and equitable resolution of matters involving farm debts by requiring mediation before a Creditor can take possession of property or other enforcement action under a farm mortgage.”

Mediation is a structured process of negotiation between a creditor and a farmer in respect to a farm debt. It requires a neutral and independent party – “The mediator” to assist the creditor and farmer to reach agreement about current and any future debt repayments.

The scheme applies to farm debt incurred by a farmer for the purposes of the conduct of a farming operation that is secured wholly or partly by a farm mortgage. A farmer is a person (whether an individual or a corporation) who is solely or principally engaged in a farming operation.

Mediation can be initiated by either the creditor or the farmer. Whether the farmer or the creditor initiates the mediation, the other party has 20 business days from the date of the notice to respond to an offer to mediate.

Farmers are not required to participate in mediation, however if they do not do so (or fail to respond to an invitation to mediate) the creditor may seek an exemption certificate and proceed with debt recovery.

If the creditor elects not to mediate and the farmer is in default, the farmer may apply to the Farm Debt Mediation Commissioner for a prohibition certificate. Prohibition can delay enforcement being initiated for up to 6 months.

Creditors are not required to offer debt write downs or concessions as part of the mediation process.

Farmers and creditors must pay an equal share of any fee charged by the mediator for the mediation unless otherwise agreed to in writing. 

A Farm Debt Mediation Grant Program has been established to support eligible farmers participating in FDM. More information on the grant program and the FDM Scheme is available on the Department of State Growth’s website https://www.stategrowth.tas.gov.au/farm-debt-mediation