POWER STRUGGLE: The Opposition says there is a significant power imbalance between farmers and creditors which could be alleviated with mediation.SA farmers may soon have greater financial protection with a bill before state parliament to makefarm debt mediation mandatory.
Last weektheFarm Debt Mediation Bill 2015passed its second reading vote in the Upper House. It requires creditors, usually a bank, to enterdiscussions with a farming business through anindependent mediator before any foreclosure action.
Similar models have been operating successfully in NSW and Vicsince 1994 and 2011.
SAhas an outdatedvoluntary code agreed upon by theAustralian Banking Association, PIRSA, SAFF and the Rural Financial Counselling Service of SA,in 2007.
Opposition Agriculture spokesperson David Ridgway,who introduced the Bill,said there was a significant power imbalance between farmers and creditors which could be alleviatedwith mediation.
“This Bill will ensure everyone hasa chance to sit around the table and discuss the best way forward.”
“Primary production is the backbone of SA’s economy and we need to be doing everything we can to ensure farmers have the best possible opportunity to keep their farms operational, “he said.
Minister for Small BusinessMartin Hamilton-Smith said the Bill was “under consideration”. In the meantimeservices for dispute resolution between farmers and financial institutions wereavailable at the Small Business Commission’s offices.
“The Farming Code is prescribed under the Small Business Commissioner Act which provides the Commissioner with extensive powers to instigate alternative dispute resolution processes,” he said.
Rural Business Support chief executive officerBrett Smith says they have given the Farm Debt Mediation Bill “in-principle” support as theFarm Finance Strategy, a voluntary code of practice set upin2007waseffectivelydefunct.
“Although parties were continuing to work together in good faith,the absence of the current voluntary code of practice being updated and signed by new signatoriesmeans there needs to be more certainty, therefore we believe that the proposed mandatory process provides this certainty for all parties,” he said.
RBSdealsin “crisis financial management” through theirRural Financial Counselling Service of SAon a regular basisand from this Mr Smithsaid they recognised the importance of early intervention.
“In many cases people make the decision to exit thefarmbefore they are made to do it but it isan extremely difficultdecision for manyhaving a huge emotional attachment to their farms.“It is human nature to hold on but often holding on gets them in a situation where they are worse off owing even more money.”
“Thisis a clear cut processinitiatedby either the bank or the farmer and gives set time frames and a process to go through,” he said.
Mr Smith said withfluctuatingcommodity prices, lowerwater allocations and vagaries of seasons there would always be a needfor farm debt mediation.Upper SE farmers entering theirthird dry yearwereparticularly vulnerable.
This story Administrator ready to work first appeared on Nanjing Night Net.