MONTPELIER — Thirty years ago, the farm sector was in the midst of a financial crisis, on a scale not seen since the Depression of the 1930s. With falling land prices and huge market shifts, record numbers of farms and banks were going under. Family farms and rural communities were hit the hardest.
To help famers address credit issues, a few state legislatures established mediation programs to bring creditors and famers together to try and stop the loss of farm property. At the federal level, Congress passed the Agricultural Credit Act of 1987, (signed into law in 1988) which authorized the Secretary of Agriculture to help individual states develop certified mediation programs to intervene and assist producers with debt and certain regulatory issues.
Three decades later, 41 states now have USDA certified agricultural mediation programs who each year help thousands of farmers, lenders, and creditors reach agreements to challenging problems. Why has this program proved so enduring?
Ag Mediation fills a gap and it works: Approximately 75% of requested mediations result in a settlement – an agreement reached by the parties to the mediation.
Farming is notoriously difficult as a business, although not due to a lack of hard work or commitment. Unpredictable weather, crop pests, and market shifts can wreak havoc with a farm’s bottom line or cash flow, which can result in debts piling up. Unpaid debts can prevent the farm from qualifying for low-interest government loans. Or there may simply be a disagreement between the farmer and creditor or government agency. Sometimes a farmer isn’t comfortable negotiating a payment plan or talking to a creditor. Or the nature of the relationship between the farmer and creditor may pose challenges, especially in small communities. In some cases, mediation services may include financial counseling to help prepare parties to work together.
Mediation works because a trained professional helps parties clarify the issues, guides the discussion to identify possible solutions, and helps develop a workable plan.
Ag Mediation Programs are voluntary and confidential: Unresolved conflicts can end up in court, loss of farm property, and loan denials. Mediation puts the farmer in the driver seat. No decision is reached without agreement by all parties. Even where formal agreements are not possible, participants often gain a better understanding of the issues and possible paths forward. Confidential information shared during a mediation remains confidential.
Ag Mediation is free for covered cases: The legislation establishing the Ag Mediation Program also outlined which types of cases can be mediated at no cost to the participants, which currently include: farm loans; credit issues; federal farm and conservation programs; wetlands determinations; grazing permits on national forest system lands; and rural housing loans. Program advocates hope to expand the types of free covered cases in response to requests for assistance with other ag-related issues such as family farm transitions, farmer/neighbor conflict, organic certification, and lease issues.
Where can I get more information?
Requesting mediation is easy. Many programs have online forms, and all have staff who can talk with you directly about your particular situation.
Vermont Agricultural Mediation Program
New Hampshire Agricultural Mediation Program
For other certified agricultural mediation programs in New England, click here.
–Vermont Agricultural Mediation Program
For more articles out of New England, click here.