This move follows a private member's bill last year that proposed compulsory mediation for rural debt before a lender could appoint a receiver. To read a copy of our submission on last year’s bill, please click here.

The new Bill will require secured lenders, before any enforcement action is taken, to offer mediation to farmers who can’t pay their debts. The objectives of the Bill are to:

• help farmers in financial distress;
• promote turnaround solutions; and
• if all else fails, allow farmers to "exit with dignity".

The Ministry for Primary Industries will be responsible for the Bill, which it expects to become law before the end of the year, with farm debt mediation services available from October 2020 and administered by MPI. For more information about the Bill, please click here.

Our take

Like the New Zealand Bankers Association and Federated Farmers, we support the concept of farm debt mediation, although the detail will need to be carefully analysed to ensure the needs of both lenders and farmers are met. As we said last year, in our experience, lenders usually enter into considered and lengthy discussions with their rural borrowers before taking any enforcement steps. The banking sector has demonstrated, over recent years and during the course of two recent crises (kiwifruit and dairy) that it will exercise restraint where farmers are confronted with financial difficulty.

How can I have my say?

Interested parties will have the opportunity to submit on the Bill during the select committee stage.

Please contact us if you would like more information about the proposed Bill.