A new scheme to help farmers in financial distress has been launched, as farm debt in New Zealand increases.
The new legislation would force creditors to offer mediation before they take enforcement action on farmers who default on payments. It will be introduced to the house "soon", Government officials said today.
Announcing the plan alongside Agriculture Minister Damien O'Connor, Prime Minister Jacinda Ardern said this afternoon that the bill focuses on "early intervention".
“Farms are much more than a business," she said. "We want to ensure there are protections in place.”
Farm debt has risen 270 per cent compared to 20 years ago and now sits at $62.8 billion, Mr O'Connor said in a statement.
"Farmers are especially vulnerable to business down-turns, as a result of conditions that are often outside their control like weather, market price volatility, pests and diseases," he said.
"The failure of a farm business can lead to the farmer and their family losing both their business and their home. For many rural communities the failure of one farm can have a ripple effect through those communities and the regional economy."
The Farm Debt Mediation Bill was originally a New Zealand First private members' bill that had made it to its second reading. Officials said today it has now been "reworked and reintroduced" as a coalition Government offering.
Mr O’Connor said today the financial issues farmers are facing span back 20 years, and “this brings some balance back”.
“It does place some disciplines where those disciplines have not always been,” he said. “It does put in place a fair process...These are people who are at the core of our economy.”
Federated Farmers Vice President Andrew Hoggard said in a statement today the organisation welcomed the proposed legislation.
"Although we hope this legislated farm debt mediation won’t have to be used very often, it will have done its job if it helps banks and farmers find enduring and sustainable solutions before it is too late," he said.
“Farmers are also facing a raft of policy changes, including around freshwater management and climate change, and these could apply even further pressure.”