Thursday, 12 September 2019 10:55

Debt mediation Bill will help hard-pressed farmers — O’Connor

Written by  Jill Galloway
Agriculture minister Damien O’Connor believes the new bill will go along way helping farmers dealing with debt. Agriculture minister Damien O’Connor believes the new bill will go along way helping farmers dealing with debt.

The Farm Debt Mediation Bill will go far in helping farmers deal with farm debt, claims Agriculture Minister Damien O’Connor.

Farm debt has risen 270% during the past 20 years and is now at least $62 billion, says O’Connor.

The bill will create a new compulsory mediation scheme to support farmers in financial distress in dealings with their lenders.

“The Farm Debt Mediation Bill will require creditors to offer mediation to farmers who default on payments before they take any enforcement action,” he told Rural News.

O’Connor, who is also Minister of Rural Communities, says farmers have been doing it tough in recent years due to rising levels of farm debt and there is a hefty power imbalance between farmers and lenders.

“Farmers are especially vulnerable to business downturns as a result of conditions often outside their control, like weather, market price volatility, pests and diseases like Mycoplasma bovis.”

He says farmers who run a family businesses often don’t have the resources to negotiate their own protection when dealing with lenders. 

“That’s where this piece of legislation fits in.”

O’Connor says the Bill is pragmatic in being focussed on early intervention.

He points out that farms are often much more than a business.

“They are the centre point for a family and for a community. And the failure of a farm business can lead to the farmer and their family losing both their business and their home.” 

O’Connor claims the Bill will also help to acknowledge and support mental health problems which can be associated with farm debt issues. It will create opportunities to improve a business and farm practice before they hit a crisis point.

“This legislation will give us a system of mediation where a bank and a borrower come together and work out a way of moving forward or find a way for a farmer with an unviable business to exit with dignity. It’s a process that will ensure a fairer system of justice for those in financial distress.”

O’Connor says the scheme has broad support from lenders, including all major banks, the New Zealand Bankers Association and Federated Farmers.

He expects each case of mediation to cost about $6000 split between farmer and lender -- about $3000 each. The next step will be a second reading of the Bill in Parliament, with changes resulting from the parliamentary select committee process. A report to Parliament is due on the Bill on November 4.

“We are aiming for the Bill to pass into law before the end of the year, with [most of its content] coming into effect in February 2020,” O’Connor said.

More like this

An actual plan or more woolly thinking?

Despite claims by Agriculture Minister Damien O’Connor that a new report will be the plan “to revitalise New Zealand’s strong wool sector…” there’s widespread belief it will do no such thing.

Are the workers there?

Despite the critical function the primary sector has to play in New Zealand’s economic recovery, it may not have the workforce available to carry this role out.

Featured

Water reforms come at a cost

The government’s new freshwater laws, signed off this week, have the potential to create significant unnecessary costs for ratepayers, farmers and entire communities, Federated Farmers says.

2020 harvest yields up

Final harvest data for wheat, barley and oats (milling/malting and feed) in 2020 show yields were up 17% overall across the six crops.

 

Difficult but the right call

DairyNZ chief executive Dr Tim Mackle says the joint decision three years ago to eradicate Mycoplamsa bovis was a difficult call.

Milking cluster milks runner-up award

DeLaval has come away with the runner up prize in this year’s Fieldays Online innovation competition with a new milking cluster that eliminates the need for conventional liner changes.

Glow worms to cows

Thomas Lundman's work focus has gone from tracking tiny critters in pitch black caves to looking after considerably larger animals in paddocks near Whakatane.

» Latest Print Issues Online

The Hound

Spell check

Your old mutt was not surprised to see the NZ Dairy Industry Awards hastily remove the title of this year’s…

About time!

Your canine crusader has been a long-time critic of NZ governments – of all stripes – who, for the past…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter